EXHIBIT 10.7
XXXXXXX & CO., INC.
a California corporation
and
ANDROMEDIA, INC.
a California corporation
SUBLEASE AGREEMENT
Dated
August 12, 1999
SUBLEASE
Table of Contents
Recitals Page
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Section 1. Sublease................................................................ 1
Section 2. Warranty by Sublandlord................................................. 2
Section 3. Term.................................................................... 2
Section 4. Rent.................................................................... 3
Section 5. Security Deposit........................................................ 5
Section 6. Use of Premises......................................................... 6
Section 7. Utilities and Janitorial Services....................................... 6
Section 8. Services................................................................ 7
Section 9. Repairs and Maintenance................................................. 8
Section 10. Assignment and Subletting............................................... 9
Section 11. Other Provisions of Sublease............................................ 12
Section 12. Attorney Fees........................................................... 13
Section 13. Broker.................................................................. 13
Section 14. Notices................................................................. 13
Section 15. Successors and Assigns.................................................. 13
Section 16. Attornment.............................................................. 13
Section 17. Entry................................................................... 13
Section 18. Late Charge and Interest................................................ 14
Section 19. Improvements............................................................ 14
Section 20. Option To Extend Term................................................... 14
Section 21. Determination of Minimum Rent for Extension Option...................... 15
Section 22. Sale by Master Landlord to Sublandlord.................................. 16
Section 23. Quiet Enjoyment......................................................... 16
Section 24. Entire Agreement........................................................ 16
Section 25. Time of Essence......................................................... 16
Section 26. Governing Law........................................................... 16
Section 27. Offer................................................................... 16
Section 28. Further Assurances...................................................... 17
Schedule of Exhibits
Exhibit A: Master Lease
Exhibit B: Premises
Exhibit C: Work Letter
C-1: Base Building Improvements
Exhibit D: Commencement Date Memorandum
Exhibit W: Warrant
SUBLEASE
This Sublease ("Sublease") dated for reference purposes as of August 12,
1999, is made between XXXXXXX & CO. INC., a California corporation
("Sublandlord"), and ANDROMEDIA, INC., a California corporation ("Subtenant").
RECITALS
A. Sublandlord is the tenant under that certain Amended and Restated
Standard Industrial/Commercial Single-Tenant Lease -- Net dated as of September
30, 1998 ("Original Master Lease"), pursuant to which 611 Mission LLC, a
California limited liability company ("Master Landlord") leased to Sublandlord
real property including an approximately 38,500 rentable square foot building
("Building") located in the City and County of San Francisco, State of
California, described as 000 Xxxxxxx Xxxxxx ("Master Premises").
B. The original Master Lease has been amended by an Addendum dated June
17, 1999. The Original Master Lease, together with the addendum, are
collectively referred to as the "Master Lease."
C. A copy of the Master Lease with certain confidential information
having been omitted is attached and incorporated in this Sublease as Exhibit A.
D. Master Landlord holds and intends to exercise an option to purchase
the Master Premises during the term of this Sublease.
Section 1. Sublease.
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(a) Premises. Sublandlord subleases to Subtenant on the terms and
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conditions in this Sublease the following portion of the Master Premises
("Premises"): approximately 27,500 rentable square feet consisting of the third
(3rd) through seventh (7th) floors of the Building shown in the floor plans
attached as Exhibit B. The Rentable Area within the Premises shall be
determined by Sublandlord's Architect as of the Commencement Date and provided
to Subtenant in writing (including the detail of Sublandlord's Architect's
calculations) within ten (10) days of the Commencement Date. The term "Rentable
Area" shall mean the floor area with measurements determined in accordance with
Building Owners and Managers Association International adopted Standard Method
for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996. In the
event the Premises Rentable Area or Building Rentable Area differ from the
approximate Rentable Area specified in the Recitals above, the Rent, Security
Deposit, Subtenant's Share, Subtenant Improvement Allowance, and all other
figures calculated from the Rentable Area provided for under this Sublease,
shall be adjusted by Sublandlord to reflect the Rentable Area calculated by
Sublandlord's Architect following the Commencement Date which amounts shall be
memorialized between the parties in a Commencement Date Memorandum (defined
below) executed by Sublandlord and Subtenant.
(b) Common Areas. In addition to the Premises, Sublandlord grants to
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Subtenant a non-exclusive license, irrevocable for the term of this Sublease,
for use of the common stairways, hallways, lobby areas, and elevators located
within the Building but specifically excluding the premises of other tenants of
the Building ("Common Areas") with Sublandlord and other tenants of the Building
and their invitees, contractors, agents and employees. Sublandlord reserves the
right to modify the size, location and/or configuration of all or any portion
the Common Areas provided such modification does not materially and adversely
interfere Subtenant's use of the Premises as permitted under this Sublease. The
use of the Common Areas shall at all times be subject to all reasonable, uniform
and non-discriminatory applicable laws and the rules and regulations adopted by
Sublandlord from time to time.
Section 2. Warranty by Sublandlord. Sublandlord warrants to Subtenant
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that: (i) the copy of the Master Lease attached hereto is a true, complete and
correct copy thereof; (ii) the Master Lease has not been amended or modified
except as expressly set forth in the Recitals to this Sublease; (iii) that
Sublandlord is not now, and as of the commencement of the Term (defined in this
Sublease) of this Sublease will not be, in default or breach of any of the
provisions of the Master Lease; (iv) that Sublandlord has no knowledge of any
claim by Master Landlord that Sublandlord is in default or breach of any of the
provisions of the Master Lease; and (v) to Subtenant's knowledge Master Landlord
is not in breach or default of any of its obligations under the Master Lease.
Section 3. Term. The term of this Sublease (the "Term") will commence
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(the "Commencement Date"), on the later to occur of the Substantial Completion
of the Subtenant Improvements (as defined in the Work Letter attached as Exhibit
C; or November 30, 1999 (the "Estimated Commencement Date") and shall end on the
last day of the sixtieth (60th) full calendar month thereafter ("Termination
Date"), unless extended or terminated sooner in accordance with the provisions
of this Sublease. If the Commencement Date occurs on a date other than the
Estimated Commencement Date, Sublandlord and Subtenant shall execute a
memorandum setting forth the actual date of commencement of the Term
substantially in the form of attached Exhibit D (the "Commencement Date
Memorandum"). For purposes of this Sublease, a "Lease Year" will constitute the
twelve month period following the first day of the first calendar month
following the Commencement Date or anniversary of the Commencement Date
throughout the Lease Term. Possession of the Premises ("Possession") will be
delivered to Subtenant upon Substantial Completion of the Improvements in the
Premises (as defined in the Work Letter). If for any reason Sublandlord does not
deliver Possession to Subtenant on or before the Estimated Commencement Date,
Sublandlord will not be subject to any liability for this failure and the
validity of this Sublease will not be impaired. Rent will be abated until
delivery of Possession. However, if Sublandlord has not delivered Possession to
Subtenant on or before May 15, 2000, at any time after that and before delivery
of Possession, Subtenant may give written notice to Sublandlord of Subtenant's
intention to cancel this Sublease. The notice will set forth an effective date
for the cancellation, which will be at least fifteen (15) days after delivery of
notice to Sublandlord. If Sublandlord delivers Possession to Subtenant on or
before this effective date, this Sublease will remain in full force. If
Sublandlord fails to deliver Possession to Subtenant on or before this effective
date, this Sublease will be canceled. Upon cancellation, all consideration
previously paid by Subtenant to Sublandlord on account of this Sublease will be
returned to Subtenant, this Sublease will have no further force, and
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Sublandlord will have no further liability to Subtenant because of this delay or
cancellation. If Sublandlord permits Subtenant to take Possession prior to the
Commencement Date, the early Possession will not advance the Termination Date
and will be subject to the provisions of this Sublease, and Section 3.2 of the
Master Lease.
Section 4. Rent. All monetary obligations of Subtenant to Sublandlord
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under the terms of this Sublease (except for the Security Deposit) are deemed to
be rent ("Rent").
(a) Minimum Rent. Subtenant will pay to Sublandlord as minimum rent
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("Minimum Rent"), without deduction, setoff, notice, or demand, at 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, 00000 or at any other place Sublandlord designates by
notice to Subtenant, the sum per month, in advance of the first day of each
month of the Term in the following amounts per Lease Year:
Lease Year 1 (plus any partial month at Term commencement)..................... $80,208 per month
Lease Year 2................................................................... $82,500 per month
Lease Year 3................................................................... $84,792 per month
Lease Year 4................................................................... $89,375 per month
Lease Year 5................................................................... $93,958 per month
Subtenant will pay to Sublandlord on execution of this Sublease the sum of
Four Hundred Eighty-one Thousand Two Hundred Forty Eight Dollars ($481,248) to
be applied as a credit against the initial installments of Minimum Rent due
hereunder, it being understood that if this Sublease is terminated for any
reason, (other than Subtenant Breach in which case unapplied pre-paid Rent shall
be added to the Security Deposit), before the full amount of such credits has
been applied to accrued Rent, then any such amounts not applied to Rent or other
monetary obligations then due Sublandlord from Subtenant under the terms of this
Sublease, shall be promptly returned by Sublandlord to Subtenant. If the Term
begins or ends on a day other than the first or last day of a month, the rent
for the partial months will be prorated on a per diem basis. In the event the
Rentable Area of the Premises determined pursuant to Section 2 above differs
from the Rentable Area stated in the Recitals, the Minimum Rent shall be
adjusted to the restated Rentable Area in the following amounts per Lease Year:
Lease Year 1 (plus any partial month at Term commencement).................... $35 per rentable square foot per month
Lease Year 2.................................................................. $36 per rentable square foot per month
Lease Year 3.................................................................. $37 per rentable square foot per month
Lease Year 4.................................................................. $39 per rentable square foot per month
Lease Year 5.................................................................. $41 per rentable square foot month
which amounts shall be memorialized between the parties in the Commencement Date
Memorandum (defined above) executed by Sublandlord and Subtenant.
(b) Operating Expenses.
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(i) Building Operating Expenses. The Master Lease requires
Sublandlord to pay to Master Landlord certain of the expenses of operating the
Building of which the Premises are a part (collectively, "Building Operating
Expenses"), including, but not limited to, taxes (Section 10),
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utilities (Section 11), and insurance (Section 8). Subtenant will pay to
Sublandlord as additional rent Sixty-two and one half percent (62.5%) (subject
to adjustment pursuant to Section 1) ("Subtenant's Share") of the increase in
amounts payable by Sublandlord for Building Operating Expenses incurred during
the Term to the extent such costs exceed Building Operating Expenses paid by
Sublandlord for the 2000 calendar base year (the "Base Year"). Supplemental
property tax assessments shall be attributed to the calendar year in which the
event triggering the re-assessment occurs rather than in the calendar year in
which the property tax xxxx is actually received by Sublandlord.
(ii) Master Premises Operating Expenses. In addition to the Building
Operating Expenses, Subtenant shall pay as additional Rent hereunder,
Subtenant's Share of the increase of Master Premises Operating Expenses incurred
by Sublandlord in the maintenance and operation of the Master Premises over the
Master Premises Operating Expenses for the Base Year. For purposes of this
Sublease, Master Premises Operating Expenses shall include: (a) all costs of
management, operation, and maintenance of the Building, including without
limitation: wages, salaries, and payroll burden of employees to the extent
related to the management, operation and maintenance of the Building; property
management fees and other related compensation in a reasonable and customary
amount for similarly situated Buildings; maintenance, security, and other
services including janitorial services for common areas of the Building; power,
water, waste disposal, and other utilities shared in common by Subtenant and all
other occupants of the Master Premises; materials and supplies; maintenance and
repairs including Building systems; license costs; insurance premiums and the
deductible portion of any insured loss under Sublandlord's insurance maintained
by Sublandlord but not required under the Master Lease; and depreciation on
personal property; and (b) the cost of any capital improvements made to the
Building by Sublandlord after the Base Year that (i) are made in the reasonable
expectation of reducing other Operating Expenses during the term of this
Sublease (provided that the annual amortized costs do not exceed the actual cost
savings realized and such savings do not primarily benefit any particular
occupant of the Master Premises other than Subtenant), (ii) are required for the
health and safety of tenants, or (iii) are required under any governmental law
or regulation that was not applicable to the Building at the Commencement Date,
this cost to be amortized over the reasonable useful life of such improvement as
reasonably determined by Lessor (which may be the Term for any such improvement
required due to Tenant's unique use, alteration or improvement of the Premises),
together with interest on the unamortized balance at the rate of ten percent
(10%) per annum, or a higher rate equal to that paid by Sublandlord on funds
borrowed for the purpose of constructing or installing those capital
improvements. Master Premises Operating Expenses shall not include; (i) any
Building Operating Expenses; (ii) costs occasioned by casualties or by the
exercise of the power of eminent domain reimbursed by insurance or condemnation
award; (iii) increases in insurance costs caused by the activities of another
occupant of the Master Premises; (iv) costs of structural repairs to the
Premises or Master Premises, including the roof, the exterior load bearing
walls, footings, foundation and structural floors; and (v) costs for which
Sublandlord is reimbursed by its insurance carrier, Master Landlord or any other
third party.
(iii) Building Operating Expenses and Master Premises Operating
Expenses shall collectively be referred to herein as "Operating Expenses".
Component expenses of actual Operating Expenses that are affected by variations
in occupancy levels for both the Base Year and
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each subsequent calendar year shall be "grossed up" to equal that amount of
Operating Expenses that, using Sublandlord's reasonable projections, would
normally be expected to be incurred during the Base Year or subsequent calendar
year had the total Rentable Area of the Building been occupied. If, during any
calendar following the Base Year, insurance costs incurred by Sublandlord are
increased or reduced because of the inclusion or removal of earthquake or flood
insurance coverage in Building insurance policies, Base Year Operating Expenses
shall be likewise increased or reduced in order to calculate Subtenant's share
of any increase on Operating Expenses during the year in which such change of
insurance coverage occurred.
(iv) The payment by Subtenant of Operating Expenses shall be on the
basis of an estimate delivered to Subtenant prior to the expiration of each
calendar year, or as soon as reasonably possible thereafter and subject to re-
adjustment during the year. Within ninety (90) days following each calendar
year, or as soon as reasonably possible thereafter, Sublandlord shall provide
Subtenant with an accounting of actual Operating Expenses and statement of
required adjustment between estimated and actual Operating Expenses. Any
overpayment of Operating Expenses by Subtenant shall be credited toward
estimated Operating Expenses for the following calendar year and any
underpayment shall be paid by Subtenant to Sublandlord within thirty days of
receipt of such statement from Sublandlord. If this adjustment occurs after the
expiration or earlier termination of the Term, the obligations of Sublandlord
and Subtenant under this Subsection will survive this expiration or termination
and any overpayment by Subtenant shall be refunded.
(v) If Subtenant disputes the amount of Operating Expenses stated in
the statement, Subtenant may designate, within thirty (30) days after receipt of
that statement, an independent certified public accountant to inspect
Sublandlord's records. Subtenant is not entitled to request that inspection,
however, if Subtenant is then in Default under this Sublease. The accountant
must be a member of a nationally recognized accounting firm and must not charge
a fee based on the amount of Operating Expenses that the accountant is able to
save Subtenant by the inspection. Subtenant must give reasonable notice to
Sublandlord of the request for inspection, and the inspection must be conducted
in Sublandlord's offices at a reasonable time or times. If, after that
inspection, Subtenant still disputes the Operating Expenses, a certification of
the proper amount shall be made, at Subtenant's expense, by Sublandlord's
independent certified public accountant. That certification shall be final and
conclusive. If Subtenant discovers an excess of five percent (5%) or greater in
the Operating Expenses charged to Subtenant, then in addition to such
discrepancy amount Sublandlord shall pay the cost of Sublandlord's accountant's
certification and Subtenant's accountant's review within thirty (30) days of
such certification.
(c) Warrant. Upon Sublandlord's and Subtenant's execution and delivery
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of this Sublease, Subtenant will deliver to Sublandlord (or Sublandlord's
designee(s), a warrant or warrants (the "Warrant") in the form of Exhibit W
attached hereto and made a part hereof for the purchase of up to thirty thousand
(30,000) shares of the common stock of Subtenant at a price per share equal to
Fifteen Dollars ($15.00) to expire, if not earlier exercised, two (2) years from
the date hereof. As provided in the Warrant, Sublandlord's rights under the
Warrant shall vest only if and when the Commencement Date shall have occurred.
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Section 5. Security Deposit. As security for Subtenant's faithful
performance of Subtenant's obligations under this Sublease ("Security Deposit")
Subtenant agrees that, on or before the execution of this Sublease, Subtenant
shall deposit with Sublandlord and maintain throughout the Sublease Term (except
as provided below) cash or an irrevocable letter of credit, or a combination of
both, in the total amount of One Million Dollar ($1,000,000). Any such letter of
credit shall be in form and substance and issued by a bank reasonably acceptable
to Sublandlord and Sublandlord's lender and naming Sublandlord (and, if
required, Sublandlord's lender holding the first lien against the Property) as
beneficiary (the "Letter of Credit"). The Letter of Credit will secure the full
and faithful performance of each provision of this Sublease to be performed by
Subtenant. If Subtenant is in Breach of any of Subtenant's obligations under
this Sublease, Sublandlord shall have the absolute right to: (i) first exhaust
any cash portion of the Security Deposit to cure Subtenant's Breach and if the
cash portion of the Security Deposit insufficient to complete any such cure,
then (ii) draw down the full amount of the Letter of Credit on Sublandlord's
sworn statement of the Subtenant Breach. The draw down shall be added to and
increase the amount of the Security Deposit retained by Sublandlord and
thereafter required under this Section 5. If Sublandlord does apply the Security
Deposit, as increased by the Letter of Credit amount, Subtenant must within ten
(10) days written demand replenish the Security Deposit to the amount of the
Security Deposit then required hereunder. On each anniversary of the
Commencement Date, the amount of the Security Deposit may be reduced by Two
Hundred Thousand Dollars ($200,000) upon Subtenant's written request, provided
such request confirms to Sublandlord in Sublandlord's reasonable discretion,
with such evidence as Sublandlord may reasonably require, that: (a) Subtenant
has not been in Breach of this Sublease during the previous twelve-month period;
and (b) there are no uncured monetary nor material non-monetary Defaults under
the Sublease for which Subtenant has received notice. In all other respects not
inconsistent with this Section 5, the Security Deposit shall be governed by the
provisions of the Master Lease.
Section 6. Use of Premises. The Premises will be used and occupied for the
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Agreed Use provided under the Master Lease only and for no other use.
Subtenant's use shall at all time be reasonably compatible with the permitted
use of the Building by Sublandlord and other tenants of the Building. Subtenant
shall not allow the Premises to be used for any unlawful purpose, nor shall
Subtenant cause, maintain or permit any nuisance, either private or public, in,
on or about the Premises.
Section 7. Utilities and Janitorial Service. Subtenant shall obtain and
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maintain service contracts for all utilities that are separately metered to the
Premises and for janitorial services required for Subtenant's use and operation
of the Premises. Sublandlord reserves the right to disapprove any service
provider selected by Subtenant who, in Sublandlord's reasonable judgment,
creates unnecessary risk or disharmony to the efficient maintenance and
operation of the Building. Subtenant shall pay promptly (as the same becomes
due) directly to the entity or authority providing and/or billing the same (or
reimburse the entity paying for the same, as the case nay be), all charges for
electricity, telephone, telex and other electronic communication service, waste
and refuse collection, and any other utilities, materials, or services furnished
directly and exclusively, for the benefit of, and/or used by Subtenant on or
about the Premises during the Term, including, without limitation, any charges
imposed after the Term commences. In the event such charges also apply
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jointly to other tenant(s) of Sublandlord where there is a common meter or
common usage with other tenant(s), such charges shall be allocated to the
Premises by square footage as reasonably calculated and determined solely by
Sublandlord and charged as a Master Premises Operating Expense. In no event
shall Sublandlord be liable for xxxxxxxx, payment, advancement of money for
payment, or reimbursement to others for or with respect to any of the above
services, materials, or charges contracted for by Subtenant or directly
attributable to Subtenant's use of the Premises, and Subtenant shall not be
entitled to any abatement or reduction of Rent nor any rights of constructive
eviction or termination by reason of any interruption or failure of utilities,
material, or services to the Premises during the Term, except and to the extent
that such interruption or failure of utilities, material, or services to the
Premises exceeds seven consecutive days and results from the active gross
negligence or willful misconduct of Sublandlord or any of Sublandlord's
constituent members, partners, agents, or employees.
Section 8. Services.
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(a) Sublandlord shall maintain the public and Common Areas of the Building,
including, windows, the mechanical, plumbing, and electrical equipment serving
the Building, and the structure itself (to the extent not required of Master
Landlord), in reasonably good order and condition so as to meet the reasonable
needs of Subtenant, except for damage caused by the Subtenant (excluding normal
wear and tear) . Damage by Subtenant shall be repaired by Sublandlord (or as
required by Master Landlord under the Master Lease) at Subtenant's expense,
except to the extent paid for by the proceeds of available property insurance
carried or required to be carried by Sublandlord under the terms of this
Sublease or Master Landlord under the terms of the Master Lease. The standard of
maintenance shall be equal to that of other office buildings of a similar class
south of Market Street in downtown San Francisco.
(b) Sublandlord shall furnish (i) electricity (at Subtenant's cost) to
power panels located on each floor; (ii) heat and air conditioning, to the
extent reasonably required for the comfortable occupancy by Subtenant in
Subtenants use of the Premises during the period from 7:00 a m. to 6:00 p.m.
on weekdays and from 7:00 a.m. to 12:00 p.m. on Saturdays, except holidays, or a
shorter period as may be prescribed by applicable policies or regulations
adopted by any utility or governmental agency, (iii) elevator service, (iv)
lighting replacement, for building standard lights, (v) restroom supplies, (vi)
window washing with reasonable frequency, (vii) water for the restrooms and
Subtenant supplied kitchen areas. Sublandlord may establish reasonable measures
to conserve energy and water, including but not limited to, automatic light shut
off after hours and efficient lighting forms, so long as these measures do not
unreasonably interfere with Subtenant's use of the Premises.
(c) Sublandlord shall not be in default under this Sublease, nor be liable
for any damages resulting from, nor shall the required rental be abated because
of (i) the installation, use, or interruption of use of any equipment in
connection with furnishing the previously listed services, (ii) failure to
furnish or delay in furnishing these services, when failure or delay is caused
by accident or conditions beyond the reasonable control of Sublandlord or by
necessary repairs or improvements to the Premises or to the Building, or (iii)
the limitation, curtailment, rationing, or
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restrictions on use of water, electricity, gas, or any other form of energy
serving the Premises or the Building. Sublandlord shall use reasonable efforts
to diligently remedy interruptions in the furnishing of these services.
(d) If heat-generating equipment or lighting, other than building standard
lights, are installed or used in the Premises, and this equipment or lighting
affects the temperature otherwise maintained by the air conditioning system, or
if equipment is installed in the Premises that requires a separate temperature
controlled room, on Subtenant's request or at Sublandlord's election after
notice to Subtenant, Sublandlord shall install supplementary air conditioning
facilities in the Premises or shall modify the ventilating and air conditioning
system serving the Premises. The capital and maintenance costs of these
facilities and modifications shall be borne by Subtenant. However, if Subtenant
objects to the proposed installation of supplementary air conditioning
facilities or the modification of the ventilating and air conditioning system,
Sublandlord shall not make the installation or modification, but Sublandlord
shall be relieved of obligations under Section 8(b) of this Sublease to the
extent that comfortable occupancy of the Promises cannot be provided without the
installation or modification.
(e) On ten (10) business days' receipt of a xxxx, Subtenant shall
reimburse Sublandlord for the cost of (i) all heat or air conditioning provided
to the Premises during hours requested by Subtenant when those services are not
otherwise furnished by Sublandlord, and (ii) all power and cooling energy
provided for supplementary air conditioning facilities in the Premises.
Subtenant shall also pay the cost of any transformers, additional risers, panel
boards, and other facilities, if reasonably required to furnish power for
supplementary air conditioning facilities in the Premises. The cost of item (i)
shall be a per hour charge, reflecting the electrical energy, labor, and fixed
plant costs (excluding depreciation) of running the heating and air conditioning
system.
(f) In the event that Sublandlord, at Subtenants request, provides
services to Subtenant that are not otherwise provided for in this Sublease,
Subtenant shall pay Sublandlord's reasonable charges for these services on
billing of Sublandlord.
Section 9. Repairs and Maintenance.
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(a) Subtenant shall, at Subtenant's sole expense, keep and maintain the
Premises, including, without limitation, interior walls, all windows (interior),
window frames, plumbing fixtures within the Premises (such as water and drain
lines, sinks, toilets, faucets, drains, showers, and water fountains; but
excluding bathroom plumbing), electrical fixtures within the Premises (such as
conduits outlets, and lighting fixtures, including lamps, bulbs, tubes, and
ballasts), interior surfaces of the Premises, latches, locks, skylights (if
any), and fire extinguishing equipment within the Premises, and all other
interior improvements installed by or on behalf of Subtenant that are part of
the Premises and are not required to be maintained by Sublandlord pursuant to
Section 9(e). Subtenant will keep such items in good and clean condition and
repair, including, without limitation, through a janitorial service contract
(reasonably approved by Sublandlord), and by replacing such items as needed, and
deliver to Sublandlord physical possession of the Premises at the termination of
this Sublease or any sooner expiration thereof, in good condition and repair,
reasonable wear and tear excepted. All repairs and replacements required of
Subtenant shall be promptly made with new
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materials of like kind and quality. If the work affects the structural elements
of the Premises or if the estimated cost of any item of repair or replacement is
in excess of One Thousand Dollars ($1,000), Subtenant shall first obtain
Sublandlord's written approval of the scope of the work, the plans for the work,
the materials to be used, and the contractor hired to perform the work. At
Sublandlord's election, such maintenance responsibilities and charges shall be
performed by Sublandlord and Subtenant shall reimburse Sublandlord as additional
rent the cost of such maintenance responsibilities and charges.
(b) Subject to reimbursement pursuant to Section 4(b) Sublandlord shall
maintain for the Building, with licensed repair and maintenance contractors: (i)
a service contract for the maintenance of all heating, air conditioning, and
ventilation equipment and (ii) a service contract for the maintenance of fire
alarm and sprinkler systems. The HVAC contract shall provide for periodic
inspections and servicing of the heating, air conditioning, and ventilation
equipment at least once every ninety (90) days during the Term of the Sublease.
(c) If at any time during the Term, including renewals or extensions
thereof, Subtenant fails to maintain the Premises, make any repairs or
replacements as required by this Section, Sublandlord shall have the right to,
but shall not be required to, enter the Premises and perform the maintenance or
make the repairs or replacements or enter into appropriate service contracts, as
the case may be. Any sums expended by Sublandlord in so doing, together with
interest at the lesser of ten percent (10%) per annum or the highest rate
allowed by law, shall be deemed additional rent and shall be due from Subtenant
promptly on demand of Sublandlord.
(d) Subtenant waives the provisions of Civil Code 1941 and 1942 and any
other law that would require Sublandlord to maintain the Premises in a
tenantable condition or would provide Subtenant with the right to make repairs
and deduct the cost of those repairs from the rent.
(e) Subject to reimbursement pursuant to Section 4(b), and Master
Landlord's obligations under the Master Lease, Sublandlord shall maintain the
Common Areas, Building foundation, the exterior wall structure, and the roof,
load-bearing portions of interior walls of the Building, (excluding wall
coverings, painting, glass, and doors), Building systems (HVAC, water, sewer,
electrical and plumbing) and bathroom and Building main plumbing repairs (but
excluding repairs required due to Subtenant's misuse of facilities which may be
completed by Sublandlord at Subtenant's expense, except to the extent paid for
by the proceeds of available property insurance carried or required to be
carried by Sublandlord under the terms of this Sublease or Master Landlord under
the terms of the Master Lease). Except as set forth in Exhibit C, Sublandlord
will not be required to make any, and Subtenant shall be responsible for the
cost of, any repair resulting from: any Alteration or modification to the
Building or to mechanical equipment within the Building performed by, for, or
because of Subtenant or to special equipment or systems installed by, for, or
because of Subtenant; the installation, use, or operation of Subtenant's
property, fixtures, and equipment; the moving of Subtenant's property in or out
of the Building or in and about the Premises; Subtenant's use or occupancy of
the Premises in violation of Section 6 of this Sublease or in the manner not
contemplated by the parties at the time of the execution of this Sublease; the
acts or omissions of Subtenant and Subtenant's employees, agents, invitees,
subtenants, licensees, or
-9-
contractors; fire and other casualty, except as provided by this Sublease.
Sublandlord shall have no obligation to make repairs under this Section until a
reasonable time after receipt of written notice from Subtenant of the need for
repairs. Subtenant waives any right to repair at the expense Of Sublandlord
under any applicable governmental laws, ordinances, statutes, orders, or
regulations now or later in effect. If Sublandlord's obligations under this
Section would result in capital repairs or improvements to the Premises, such
costs shall be amortized in accordance with Section 4(b)(ii)(b).
Section 10. Assignment and Subletting.
-------------------------
(a) Subtenant shall not assign or hypothecate this Sublease or any interest
herein (by operation of law or otherwise), shall not sublet the Premises or any
part thereof, or permit the use of the Premises by any party other than
Subtenant, shall not mortgage or encumber the Sublease (or otherwise use the
Sublease as a security device) in any manner and shall not materially amend or
modify an assignment, sublease, or other Transfer that has been previously
approved by Sublandlord (each a Transfer) without the prior written consent of
Sublandlord which shall not be unreasonably withheld. If Subtenant is a
corporation, a partnership, or a limited liability company, the transfer (as a
consequence of a single transaction or any number of separate transactions) of
fifty percent (50%) or more of the beneficial ownership interest of the voting
stock of Subtenant issued and outstanding as of the date hereof (other than
stock transfers over a public exchange if Subtenant is or becomes a publicly
traded company on a nationally recognized exchange) or partnership interests in
Subtenant, or ownership interests in Subtenant, as the case may be, shall
constitute a Transfer hereunder for which such consent is required. Further,
Subtenant shall not Transfer this Sublease to any corporation which is
controlled by, or is under common control with Subtenant, or to any corporation
resulting from merger or consolidation with Subtenant, or to any person or
entity which acquires all the assets as a going concern of the business of
Subtenant that is being conducted on the Premises, without the prior written
consent of Sublandlord which shall not be unreasonably withheld. Any of the
foregoing acts without such consent shall be void, and, at the option of
Sublandlord, shall terminate this Sublease. Notwithstanding anything to the
contrary contained in this Section, provided the use of the Premises does not
change and Subtenant fully complies with the remaining provisions of this
Section, including but not limited to subsection (f) below, Subtenant may
Transfer this Sublease without first obtaining Sublandlord's consent (a
"Permitted Transfer") to: (i) an entity which controls Subtenant and has
assumed, or is deemed by law to be liable for, all of the liabilities of
Subtenant; (ii) a wholly owned subsidiary of Subtenant provided Subtenant
remains directly liable under this Sublease; or (iii) a corporation, limited
liability company, or other entity which results from a merger, consolidation,
reorganization, or asset sale with Subtenant in which the surviving entity (A)
acquires substantially all of the assets of Subtenant as a going concern, (B)
assumed, or is deemed by law to be liable for, all of the liabilities of
Subtenant, and (C) has after such merger, consolidation, reorganization, or
asset sale a net worth not less than Subtenant's net worth immediately preceding
such merger, consolidation, or other reorganization.
(b) In the event that Subtenant should desire to Transfer this Sublease,
Subtenant shall provide Sublandlord with written notice of such desire at least
thirty (30) days in advance of the effective date of such Transfer. Such notice
shall include a fully executed letter of intent between
-10-
Subtenant and the transferee setting forth the terms of the Transfer, a current
financial statement of the proposed sublessee or assignee (covering the
preceding three (3) years, if they exist); and a processing fee of One Thousand
Dollars ($1,000). At any time within thirty (30) days following receipt of
Subtenant's notice, Sublandlord may by written notice to Subtenant elect to (i)
in Sublandlord's sole and absolute discretion terminate this Sublease as to the
space affected as of the effective date of the proposed Transfer but only in the
event Subtenant is seeking to sublet one floor or more of the Premises for more
than half of the remaining Term; (ii) consent to the proposed subletting of the
Premises or assignment of this Sublease; or (iii) disapprove of the proposed
Transfer. If Sublandlord elects to terminate this Sublease, Subtenant may,
within five (5) days of Sublandlord's election, rescind its request for the
Transfer and such termination shall not take effect. If Sublandlord does not
elect (or is not permitted) to terminate this Sublease, however, Sublandlord
shall not unreasonably withhold its consent to a proposed Transfer if Subtenant
is not in Breach under this Sublease at the time Subtenant requests such
consent. Without limiting other situations in which it may be reasonable for
Sublandlord to withhold its consent to any proposed assignment or sublease,
Sublandlord and Subtenant agree that it shall be reasonable for Sublandlord to
withhold its consent in any one or more of the following situations: (i) if, in
Sublandlord's reasonable judgment, the net worth of the proposed subtenant or
assignee is not commensurate with the obligations of Subtenant under the
proposed sublease; (ii) in Sublandlord's reasonable judgment, the business
history and reputation in the community of the proposed subtenant or assignee
does not meet the standards applied by Sublandlord; (iii) the proposed subtenant
or assignee shall be a prospective tenant or a then existing tenant of
Sublandlord; (iv) the use proposed by the proposed subtenant or assignee will
violate any lease or agreement to which Sublandlord is a party or introduce
undesirable Hazardous Substances to the Property; (v) the proposed subtenant or
assignee does not meet the qualifications applied by Sublandlord's lender having
a first lien on the Premises; (vi) or the proposed subtenant or assignee is a
governmental agency, maintains the power of eminent domain or is exempt from the
payment of ad valorem or other taxes which would prohibit Sublandlord from
collecting any amounts otherwise payable under this Sublease. In any event,
Sublandlord shall be entitled to exercise its right of termination in lieu of
consenting to a Transfer, as set forth above.
(c) Except with respect to a Permitted Transferee, Sublandlord and
Subtenant agree that fifty percent (50%) of any rent or other consideration
received or to be received by or on behalf of or for the benefit of Subtenant as
a result of any Transfer, in excess of the aggregate of (i) the Minimum Rent
which Subtenant is obligated to pay Sublandlord under this Sublease (prorated to
reflect obligations allocable to that portion of the Premises subject to such
sublease); and (ii) any leasing commissions, marketing costs or transferee
required tenant improvements to the Premises (not to exceed $10 per Rentable
square foot subleased) paid by Subtenant in connection with the entry by it
into the Transfer, amortized over the remaining months of the Sublease Term,
shall be payable to Sublandlord as additional rent under this Sublease without
affecting or reducing any other obligation of Subtenant hereunder.
Sublandlord's share of such excess rent or other consideration shall be paid
monthly by the subtenant or assignee directly to Sublandlord at the same time as
such rent or other consideration is payable to Subtenant.
(d) Regardless of Sublandlord's consent, no Transfer shall release
Subtenant of Subtenant's obligation or alter the primary liability of Subtenant
for rent and performance of all
-11-
other obligations to be performed by Subtenant hereunder. Acceptance of rent by
Sublandlord from any other person shall not be deemed to be a waiver by
Sublandlord of any provision hereof. Consent to one assignment or subletting
shall not be deemed consent to any subsequent or further Transfers. In the event
of default by any assignee or successor of Subtenant in performing any of the
terms hereof, Sublandlord may proceed directly against Subtenant without the
necessity of exhausting remedies against said assignee or successor. Sublandlord
may consent to subsequent Transfers of this Sublease or amendments or
modifications to this Sublease with assignees of Subtenant, without notifying
Subtenant, or any successor of Subtenant, and without obtaining its or their
consent thereto and such action shall not relieve Subtenant or any successor of
Subtenant of liability under this Sublease.
(e) Subtenant shall pay to Sublandlord, as an additional rent, all out of
pocket and actual costs and reasonable attorney fees incurred by Sublandlord (or
imposed on Sublandlord by its lender having a first lien on the Premises) in
connection with the evaluation, processing, or documentation of any requested
Transfer, whether or not Sublandlord's consent is granted. Sublandlord's costs
shall include the cost of any review or investigation performed by Sublandlord
or on behalf of Sublandlord of: (i) any Hazardous Substances used, stored,
released, or disposed of by the proposed subtenant or assignee, or (ii)
violations of any Applicable Requirement by the Subtenant or the proposed
subtenant or assignee.
(f) In order for any Transfer to be binding on Sublandlord, including any
Permitted Transfer, Subtenant shall deliver to Sublandlord, promptly after
execution thereof an executed copy of such sublease or assignment whereby the
sublessee or assignee shall expressly assume the obligations of Subtenant under
this Sublease. Any Transfer approved by Sublandlord shall not be effective
until Subtenant has delivered to Sublandlord an executed counterpart of the
document evidencing the Transfer in form and substance reasonably satisfactory
to Sublandlord.
(g) Any attempted Transfer without Sublandlord's consent shall constitute
a Breach. Sublandlord's consent to any one Transfer shall not constitute a
waiver of the provision of Section 7 as to any subsequent Transfer or a consent
to any subsequent Transfer. Subtenant hereby waives any right to terminate this
Sublease from the failure of Sublandlord to provide reasonable consent to any
proposed subtenant or assignee under any applicable governmental laws,
ordinances, statutes, orders, or regulations now or later in effect, waives any
and all actual, consequential or punitive damages resulting from any such
failure and agrees that Subtenant's sole remedy in such event of such failure
shall be the remedy of specific performance.
Section 11. Other Provisions of Sublease. Except as specifically modified
----------------------------
by this Sublease, the terms and provisions of the Master Lease are incorporated
into and made a part of this Sublease as if Sublandlord were the lessor,
Subtenant the lessee, and the Premises, the Premises under this Sublease, except
for the following which are expressly not incorporated herein: Sections: 1.1
through 1.7, 1.10, 1.12 (regarding Exhibit B), 2.1 (second sentence only) 3.1,
3.3, 7.1, 7.2, 8.6 (first clause [eight words] only), 10.2(a) (third sentence
only), 11, 12, 13.4, 13.5, 15, 22, 33, 39, 40, 49 and Addendum Sections 2, 3, 4,
6, 8, 9, 10, 12, 14, 15, 17 and Exhibit B. Notwithstanding the foregoing, the
term "Lessor" in the following provisions of the Master Lease shall mean Master
-12-
Landlord only (and not Sublandlord) 1.9, 8.3 and 9. Subtenant assumes and agrees
to perform the lessee's obligations under the Master Lease during the Term to
the extent that these obligations are applicable to the Premises. However, the
obligation to pay rent and operating costs to Master Landlord under the Master
Lease will be considered performed by Subtenant to the extent and in the amount
rent and operating costs are paid to Sublandlord in accordance with Section 4 of
this Sublease. Subtenant will not commit or suffer any act or omission that will
violate any of the provisions of the Master Lease. Sublandlord will exercise due
diligence in attempting to cause Master Landlord to perform its obligations
under the Master Lease for the benefit of Subtenant. If the Master Lease
terminates at the option of Master Landlord, this Sublease will terminate and
the parties will be relieved of any further liability or obligation under this
Sublease. However, if the Master Lease terminates as a result of a default or
breach by Sublandlord or Subtenant under this Sublease or the Master Lease, the
defaulting party will be liable to the non-defaulting party for the damage
suffered as a result of the termination. Regardless, if the Master Lease gives
Sublandlord any right to terminate the Master Lease in the event of Master
Landlord Default or Breach, the partial or total damage, destruction, or
condemnation of the Master Premises or the building or project of which the
Master Premises are a part, the exercise of this right by Sublandlord will not
constitute a default or breach.
Section 12. Attorney Fees.
-------------
If either party commences an action against the other in connection with
this Sublease, the prevailing party will be entitled to recover costs of suit
and reasonable attorney fees.
Section 13. Broker
------
Sublandlord and Subtenant each warrant that they have not dealt with any
real estate broker in connection with this transaction other than Xxxxxxx'x
International as Sublandlord's Broker and HC&M Commercial Properties as
Subtenant's Broker. Sublandlord and Subtenant each agree to indemnify, defend,
and hold the other harmless against any damages incurred as a result of the
breach of the warranty contained in this Sublease.
Section 14. Notices.
-------
All notices and demands that may be required or permitted by either
party to the other will be in writing. All notices and demands by the
Sublandlord to Subtenant will be sent by United States Mail, postage prepaid,
addressed to the Subtenant at the Premises, and to the address in this Sublease
below, or to any other place that Subtenant may from time to time designate in a
notice to the Sublandlord. All notices and demands by the Subtenant to
Sublandlord will be sent by United States Mail, postage prepaid, addressed to
the Sublandlord at the address in this Sublease, and to any other person or
place that the Sublandlord may from time to time designate in a notice to the
Subtenant.
To Sublandlord: Xxxxxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
-13-
To Subtenant:
Prior to the Commencement Date Following the Commencement Date
Andromedia, Inc. Andromedia Inc.
000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer Attn: Chief Financial Officer
Section 15. Successors and Assigns.
----------------------
This Sublease will be binding on and inure to the benefit of the
parties to it, their heirs, executors, administrators, successors in interest,
and assigns.
Section 16. Attornment. If the Master Lease terminates, Subtenant will,
----------
if requested, attorn to Master Landlord and recognize Master Landlord as
Sublandlord under this Sublease. However, Subtenant's obligation to attorn to
Master Landlord will be conditioned on Subtenant's receipt of a non-disturbance
agreement.
Section 17. Entry. Sublandlord reserves the right to enter the Premises on
-----
reasonable prior notice to Subtenent to inspect the Premises or the performance
by subtentans. In an emergency, no notice will be required for entry.
Section 18. Late Charge and Interest. The late payment of any Rent will
------------------------
cause Sublandlord to incur additional costs, including the cost to maintain in
full force the Master Lease, administration and collection costs, and processing
and accounting expenses. If Sublandlord has not received any installment of Rent
within five (5) days after that amount is due, Subtenant will pay ten percent
(10%) of the delinquent amount, which is agreed to represent a reasonable
estimate of the cost incurred by Sublandlord (except on the first such
delinquency in any calendar year on which occasion Subtenant shall only pay 5%
of the delinquent amount). In addition, all delinquent amounts will bear
interest from the date the amount was due until paid in full at a rate per annum
("Applicable Interest Rate") equal to the greater of (a) five percent (5%) per
annum plus the then federal discount rate on advances to member banks in effect
at the Federal Reserve Bank of San Francisco on the 25th day of the month
preceding the date of this Sublease or (b) ten percent (10%). However, in no
event will the Applicable Interest Rate exceed the maximum interest rate
permitted by law that may be charged under these circumstances. Sublandlord and
Subtenant recognize that the damage Sublandlord will suffer in the event of
Subtenant's failure to pay this amount is difficult to ascertain and that the
late charge and interest are the best estimate of the damage that Sublandlord
will suffer. If a late charge becomes payable for any three (3) installments or
Rent within any twelve (12) month period, the Rent will automatically become
payable quarterly in advance.
Section 19. Improvements. Prior to the Commencement Date, Sublandlord
------------
shall provide to Subtenant, at Sublandlord's cost, a completed building shell
including, common lobby/entrance, HVAC system stubbed to the Premises (but not
distributed), electrical panels with 225 amps to each floor (not distributed),
restrooms (with outside walls taped and prepared for painting) elevator, data
(fiber) and phone cabling to phone cabinets (not distributed), plumbing
connections to each floor
-14-
(not distributed but available in bathroom) smoothed and even floors and a light
well as more particularly shown in attached Exhibit C (the "Base Building
Improvements"). Pursuant to Exhibit C hereto, Sublandlord shall construct
Subtenant Improvements (as defined in Exhibit C for the Premises at Subtenant's
cost. Sublandlord shall contribute a tenant improvement allowance (the
"Allowance") to construct such Subtenant Improvements in the amount of $687,500
(subject to adjustment pursuant to Section 1 in the ratio of $25 per square foot
of Rentable Area) to be applied toward all expenses associated with the
construction, space planning, engineering, construction drawings, construction
management, signage and other necessary permits directly associated with the
Subtenant Improvements. Upon Subtenant's request, Sublandlord shall provide an
additional tenant improvement allowance to Subtenant of up to $412,500 (subject
to adjustment pursuant to Section 1 in the ratio of $15 per square foot of
Rentable Area) to be used for the construction of the Subtenant Improvements
which amount shall be amortized (at an annual interest rate of 10%) and repaid
to Sublandlord over the Term of the Sublease in the form of additional rent by
amendment to this Sublease pursuant to Exhibit C (Sublandlord Additional
Allowance). Under no circumstances shall the Allowance or Sublandlord Additional
Allowance be used for Subtenant's due diligence review of the Premises (or this
Sublease) nor the design, acquisition or planning costs of Subtenant's personal
property, furniture, trade fixtures or equipment.
Section 20. Options To Extend Term. (a) Subtenant shall have one option
----------------------
(the Extension Option) to extend the Term for five (5) years for the entire
Premises by giving Sublandlord prior written notice of Subtenant's election to
exercise this option not less than two hundred and ten (210) days before the
expiration of the Term. However, if there exists an uncured Default or Breach
on Subtenant's part either at the time of the exercise of any Extension Option
or at the time that any Option Period would commence, Sublandlord may cancel
Subtenants exercise of such Extension Option, in which case the Extension Option
shall be of no further force or effect and all subsequent Extension Options
shall be deemed canceled. The Extension Option shall be on all the same terms of
this Sublease provided that the Minimum Rent for each such Option Period shall
be increased in accordance with Section 21 of this Sublease.
(b) The Extension Option is personal to the named tenant herein and any
Transfer of such tenant's interest in the Sublease (other than a Permitted
Transfer), whether or not consented to by Sublandlord, shall cause such
Extension Option to terminate and be of no further force or effect.
Section 21. Determination of Minimum Rent for Extension Option. For
--------------------------------------------------
purposes of Section 20(a), Minimum Rent shall be determined as follows:
(a) Parties shall have until the later to occur of (i) fifteen (15) days
from the receipt by Sublandlord of Subtenant's notice electing to exercise an
Extension Option, or (ii) one hundred ninety-five (195) days prior to the
expiration of the initial Sublease Term to agree on the Minimum Rent for the
Option Period which shall in any case no less than the previous Minimum Rental
due for the last year of the expiring Sublease Term. If the parties agree on
the Minimum Rent for the Option Period, by such date, they shall immediately
execute an amendment to this Sublease stating
-15-
the Minimum Rent for the Option Period and memorializing the extension of the
Term in accordance with Section 20 hereof.
(b) If the parties are unable to agree upon the Minimum Rent for the
Option Period in accordance with Section 21(a), then within fourteen (14) days
after the parties fail to agree on the Minimum Rent for the Option Period, each
party at its cost and by giving notice to the other party, shall appoint a real
estate appraiser with at least five (5) years full time MAI appraisal experience
in the City and County of San Francisco, to determine the Minimum Rent for the
Option Period, and shall deliver to said appraiser as well as the other party,
such party's proposal for the Minimum Rent for the Option Period. If a party
does not appoint an appraiser within said fourteen (14) day period and the other
party has given notice of the name of its appraiser, the single appraiser
appointed shall be the sole appraiser and shall determine the Minimum Rent for
the Option Period. If an appraiser is appointed by each of the parties as
provided in this section, they shall meet promptly and attempt to set the
Minimum Rent for the Option Period, by agreeing on which party's proposal most
closely reflects the Fair Market Rental Value of the Premises for the Option
Period. If they are unable to agree within thirty (30) days after the second
appraiser has been appointed, the two appraisers shall within ten (10) days
following the end of such thirty-day period chose a third appraiser or if the
two appraisers cannot agree on a third appraiser within such ten-day period,
either of the parties to this Sublease, by giving ten (10) days notice to the
other party, can apply to the then Presiding Judge of the San Francisco Superior
Court for the appointment of a third appraiser who meets the qualifications
stated in this section. The third appraiser, however, shall be a person who has
not previously acted in any capacity for either party during the prior three
years. Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers shall determine which party's proposal more closely
reflects the Fair Market Rental Value of the Premises for the Option Period.
The party whose proposal is not selected shall bear the cost of appointing the
third appraiser together with such third appraiser's fee. As used herein, Fair
Market Rental Value shall mean the then prevailing annual rental rate per square
foot of rentable area for office space in comparable buildings and with
comparable tenant improvements, in the south of Market Street area in downtown
San Francisco, for the renewal of tenant designed premises which have been
recently improved for tenant occupancy similar to the Premises, comparable in
area and location to the space for which such rental rate is being determined
(to the extent that quoted rental rates vary with regard to location), being
leased for a duration comparable to the term for which such space is being
leased and taking into consideration rental concessions and abatements, tenant
improvement allowances, and renewal commissions, if any, being offered by
Sublandlord, the present condition of the space, operating expenses and taxes,
other adjustments to basic rent and other comparable factors to lease renewal,
but excluding any adjustments for brokerage commissions, pre-occupancy
construction period rent allowances, moving allowances or other concessions
offered in the market for new space leases.
(c) After the appraisers determine which party's proposal more closely
reflects the Fair Market Rental Value of the Premises for the Option Period, the
appraisers shall immediately notify the parties and the parties of their
findings and the parties shall immediately execute an amendment to this Sublease
stating the Minimum Rent for the Option Period, which in any case shall be no
less than the previous Minimum Rental due for the last year of the expiring
Sublease Term, and which amendment shall memorialize the extension of the Term
in accordance with Section 20 hereof.
-16-
Section 22. Sale by Master Landlord to Sublandlord. In the event of a
----------
sale or conveyance of all of the Master Landlord's right title and interest in
the Master Premises to Sublandlord, Subtenant agrees to look solely to
Sublandlord as the successor in interest of Master Landlord in and to the
Building and this Sublease and this Sublease shall continue in full force and
effect as a direct lease between Sublandlord and Subtenant upon all of the
terms, covenants and conditions of the Sublease. Tenant agrees to attorn to
Sublandlord as the successor in interest of Master Landlord and to execute such
amendments or modifications to this Sublease, or restatement of this Sublease as
a lease, as may reasonably be required by Sublandlord to effect such transfer.
Section 23. Quiet Enjoyment. Subtenant shall peacefully have, hold and
---------------
enjoy the Premises, subject to the terms and conditions of this Sublease,
provided that Subtenant pays all rent and performs all of Subtenant's covenants
and agreements contained herein.
Section 24. Entire Agreement. This Sublease sets forth all the agreements
----------------
between Sublandlord and Subtenant concerning the Premises, and there are no
other agreements either oral or written other than as set forth in this
Sublease.
Section 25. Time of Essence. Time is of the essence in this Sublease.
---------------
Section 26. Governing Law. This Sublease will be governed by and
-------------
construed in accordance with California law.
Section 27. Offer. Preparation of this Sublease by Sublandlord or
-----
Sublandlord's agent and submission to Subtenant shall not be deemed an offer to
lease. This Sublease shall become binding on Sublandlord and Subtenant only when
fully executed by Sublandlord.
Section 28. Further Assurances. In addition to the actions specifically
------------------
mentioned in this Sublease, the parties shall each do whatever may be reasonably
necessary to accomplish the transactions contemplated in this Sublease
including, without limitation, execution of all applications, permits and
approvals required for construction of the Improvements; cooperation in
obtaining Subordination, Non-disturbance and Attornment Agreements from holders
of senior encumbrances on the Property, execution of a mutual waiver of
subrogation of property insurance claims between Subtenant and Master Landlord
and cooperation in completing Subtenant's Y2K compliance audit (at Subtenant's
expense) of the Building and Building Systems.
In Witness Whereof, the parties have executed this Sublease as of the date
first above written.
Subtenant: Andromedia, Inc. Sublandlord: Xxxxxxx & Co, Inc.
/s/ Xxxxxxx Xxxxxxxxx /s/Xxxxx X. Xxxxxxx
--------------------- -------------------
Xxxxxxx Xxxxxxxxx, Chief Financial Officer Xxxxx X. Xxxxxxx
Date: August __, 1999 Date: August 16, 1999
-17-
EXHIBIT A
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
AMENDED AND RESTATED
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only
September 30, 1998, is made by and between 611 MISSION LLC, a California limited
------------------ -------------------------------------
liability company ("Lessor") and XXXXXXX & CO., a California corporation
----------------- ---------------------------------------
("Lessee"), collectively the "Parties," or individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 000 Xxxxxxx Xxxxxx located in the County of San Francisco, State of
------------------ -------------
California, and generally described as (describe briefly the nature of the
----------
property and, if applicable, the "Project", if the property is located within a
Project) per paragraph 3 of the Addendum ("Premises"). (See also Paragraph 2)
---------------------------
1.3 Term: Twenty years and zero months ("Original Term")
------ ----
commencing ("Commencement Date") and ending ("Expiration
-------------- --------
Date"). (See also Paragraph 3)
1.4 Early Possession: -not applicable- ("Early Possession Date"). (See
----------------
also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $68,491.13 per month ("Base Rent"), payable on the first
---------- -----
day of each month commencing per Paragraph 4 of the Addendum. (See also
---------------------------
Paragraph 4)
[ ] If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.
1.6 Base Rent Paid Upon Execution: $68,491.13 as Base Rent for the period
----------
of the first month of the Commencement Date.
-------------------------------------------
1.7 Security Deposit: $40,000.00 ("Security Deposit"). (See also
----------
Paragraph 5)
1.8 Agreed Use: General office purposes, storage, retail, and light
---------------------------------------------------
manufacturing permitted by applicable laws. (See also Paragraph 6)
------------------------------------------
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise
stated herein. (See also Paragraph 8)
1.10 Real Estate Brokers: (See also Paragraph 16)
Page 1
(a) Representation: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
[ ] Xxxxx & Xxxxx represents Lessor exclusively ("Lessor's Broker");
----------------
[ ] represents Lessee exclusively ("Lessee's Broker"); or
----------------
[ ] represents both Lessor and Lessee ("Dual Agency").
----------------
(b) Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement which fee shall be $200,000.00.
1.11 Guarantor: The obligations of the Lessee under this Lease are to be
guaranteed by none ("Guarantor"). (See also Paragraph 37)
----
1.12 Addenda and Exhibits: Attached hereto is an Addendum or Addenda
consisting of Paragraphs 1 through 23 and Exhibits A (Legal Description) and B
- -- ---------------------------
(Work Letter), all of which constitute a part of this Lease.
-------------
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agreed is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date and that the structural elements of the
roof, bearing walls and foundation of any buildings on the Premises (the
"Building") shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, Lessor shall, as Lessor's sole obligation
with respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If, after the Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within: (i) one year as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, (ii) six (6) months as to the HVAC systems, (iii) thirty (30)
days as to the remaining systems and other elements of the Building, correction
of such non-compliance shall be the obligation of Lessee at Lessee's sole cost
and expense.
2.3 Compliance. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances
Page 2
("Applicable Requirements") in effect on the Start Date. [Said warranty does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. NOTE: Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed.] If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed (as opposed to being in existence at the
Start Date, which is addressed in Paragraph 6.2(e) below) so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building ("Capital
Expenditure"), Lessor and Lessee shall allocate the cost of such work as
follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(c); provided, however,
that if such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor's termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with interest, from Rent until Lessor's
share of such costs has been fully paid. If Lessor is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon thirty (30) days
written notice to Lessor.
Page 3
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefor as the same relates to its occupancy of the
Premises, and (c) neither Lessor, Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Lease. In addition, Lessor acknowledges that: (a)
Broker has made no representations, promises or warranties concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises, and (b) it is
Lessor's sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease (including but not limited to the obligations to pay Real Property Taxes
and insurance premiums and to maintain the Premises) shall, however, be in
effect during such period. Any such early possession shall not affect the
Expiration Date.
3.3 Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten
(10) day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period
Page 4
equal to what Lessee would otherwise have enjoyed under the terms hereof, but
minus any days of delay caused by the acts or omissions of Lessee. If possession
of the Premises is not delivered within four (4) months after the Commencement
Date, this Lease shall terminate unless other agreements are reached between
Lessor and Lessee, in writing.
3.4 Lessee Compliance. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease from
and after the Start Date, including the payment of Rent, notwithstanding
Lessor's election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other conditions prior
to or concurrent with the Start Date, the Start Date shall occur but Lessor may
elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. [If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion of
said Security Deposit for the payment of any amount due Lessor or to reimburse
or compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof.] If Lessor uses or applies all or any
portion of said Security Deposit, Lessee shall within ten (10) days after
written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. [If the Base Rent
increases during the term of this Lease, Lessee shall, upon written request from
Lessor, deposit additional monies with Lessor so that the total amount of the
Security Deposit shall at all times bear the same proportion to the Increased
Base Rent as the Initial Security Deposit bore to the Initial Base Rent.]
Should the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee, Lessor shall have
the right to increase the Security Deposit to the extent necessary, in Lessor's
reasonable judgment, to account for any increased wear and tear that the
Premises may suffer as a result thereof. If a change in control of Lessee
occurs during this Lease and following such change the financial condition of
Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall
deposit such additional monies with Lessor as shall be
Page 5
sufficient to cause the Security Deposit to be at a commercially reasonable
level based on said change in financial condition.] Lessor shall not be required
to keep the Security Deposit separate from its general accounts. Within fourteen
(14) days after the expiration or termination of this Lease, if Lessor elects to
apply the Security Deposit only to unpaid Rent, and otherwise within thirty (30)
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below,
Lessor shall return that portion of the Security Deposit not used or applied by
Lessor. No part of the Security Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under
this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises of
neighboring property to any meaningful risk of
Page 6
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessor knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for
Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
of any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties). Lessee's obligations shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.
(e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.
Page 7
(f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in Paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate
fully in any such activities at the request of Lessor, including allowing Lessor
and Lessor's agents to have reasonable access to the Premises at reasonable
times in order to carry out Lessor's investigative and remedial
responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater, given written notice to Lessee, within thirty (30) days after receipt
by Lessor knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (10) days thereafter, give written notice to
Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment. In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds
or assurance thereof within the time provided, this Lease shall terminate as of
the date specified in Lessor's notice of termination.
6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
Page 8
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises, Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all Improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of
this Lease, keep the exterior appearance of the Building in a first-class
condition consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises; (i) HVAC equipment, (ii) boiler and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers, (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.
(c) Replacement. Subject to Lessor's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in
Page 9
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such Basic Elements, then such Basic Elements shall
be replaced by Lessor, and the cost thereof shall be prorated between the
Parties and Lessee shall only be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due, an
amount equal to the product of multiplying the cost of such replacement by a
fraction, the numerator of which is one, and the denominator of which is the
number of months of the useful life of such replacement as such useful life is
specified pursuant to Federal income tax regulations or guidelines for
depreciation thereof (including interest on the unamortized balance as is then
commercially reasonable in the judgment of Lessor's accountants), with Lessee
reserving the right to prepay its obligation at any time.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damages or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures; whether by addition or deletion.
"Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations
or Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be
deemed conditioned upon Lessee's: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans
and specifications prior to commencement of the work, and (iii) compliance with
all conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For
Page 10
work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notice of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contest lien, claim or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted.
"Ordinary wear and tear" shall include any damage or deterioration that would
have been prevented by good maintenance practice. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures,
Lessee Owned Alterations and/or Utility Installations, furnishings, and
equipment as well as the removal of any storage tank installed by or for Lessee,
and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to
Page 11
this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment for Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.1(b) in excess of $2,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within ten (10) days following receipt of an
invoice.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "Additional Insured Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any groundlessor, and to any Lender(s) Insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party,
however, Lessee Owned Alterations and Utility Installations, Trade Fixtures, and
Lessee's personal property shall be insured by Lessee under Paragraph 8.4 rather
than by Lessor. If the coverage is available and commercially appropriate, such
policy or policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or earthquake unless required by a
Lender), including coverage for debris removal and the enforcement of any
Applicable Requirements requiring the upgrading,
Page 12
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor or not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay any increase in the premiums for the property insurance of
such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
8.4 Lessee's Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy form a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue
Page 13
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 Indemnity. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agent, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person of goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
Page 14
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence of
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor
Page 15
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within ten (10) days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee
shall have the right within ten (10) days after receipt of the termination
notice to give written notice to Lessor of Lessee's commitment to pay for the
repair of such damage without reimbursement from Lessor. Lessee shall provide
Lessor with said funds or satisfactory assurance thereof within thirty (30) days
after making such commitment. In such event this Lease shall continue in full
force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available. If Lessee does not
make the required commitment, this Lease shall terminate as of the date
specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) months' Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period
and provides Lessor with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and
Page 16
effect. If Lessee fails to exercise such option and provide such funds or
assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within ninety (90) days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee's election to terminate this Lease on a date not less than
sixty (60) days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within thirty (30) days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within said thirty (30) days, this
Lease shall continue in full force and effect. "Commence" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination-Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 8, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form or assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference
Page 17
to the Building address and where the proceeds so generated are to be applied by
the city, county or other local taxing authority of a jurisdiction within which
the Premises are located. The term "Real Property Taxes" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Premises.
10.2
(a) Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax xxxx applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.
(b) Advance Payment. In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes
divided by the number of months remaining before the month in which said
installment becomes delinquent. When the actual amount of the applicable tax
xxxx is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable taxes. If
the amount collected by Lessor is insufficient to pay such Real Property Taxes
when due, Lessee shall pay Lessor, upon demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may at the option of Lessor, be treated as an
additional Security Deposit.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work or such other information as may be
reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations. Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.
(b) A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.
(d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects
to treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may either: (i) terminate this Lease, or (ii) upon thirty (30) days written
notice, increase the monthly Base Rent to one hundred ten percent (110%) of the
Base Rent then in effect. Further, in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
Page 19
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall
not: (i) be effective without the express written assumption by such assignee
or subleases of the obligations of Lessee under this Lease, (ii) release Lessee
of any obligations hereunder, or (ii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or subleases, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $1,000 or
ten percent (10%) of the current monthly Base Rent applicable to the portion of
the Premises which is the subject of the proposed assignment or sublease,
whichever is greater, as consideration for Lessor's considering and processing
said request. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.
(f) Any assignee of, or subleases under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's
Page 20
obligations under this Lease; provided, however, that until a Breach shall occur
in the performance of Lessee's obligations, Lessee may collect said Rent. Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee's obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor starting that a Breach exists in
the performance of Lessee's obligations under this Lease, to pay to Lessor all
Rent due and to become due under the sublease. Sublessee shall rely upon any
such notice from Lessor and shall pay all Rents to Lessor without any obligation
or right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Beaches of such
sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) business days
following written notice to Lessee.
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(c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (ii) the
rescission of an unauthorized assignment of subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. (S) 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days; (iii) the appointment of a trustee or receiver
to take possession of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where possession is not restored
to Lessee within thirty (30) days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not discharged
within thirty (30) days; provided, however, in the event that any provision of
this subparagraph (e) is contrary to any applicable law, such provision shall be
of no force or effect, and not affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory basis, and
Lessee's failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the time of
execution of this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or
Page 22
approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessees shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under
Page 23
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any
Rent shall not be received by Lessor within five (5) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a one-time charge equal to five percent (5%) of each such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due for non-
scheduled payment, shall bear interest from the date when due, as to scheduled
payments, or the thirty-first (31/st/) day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date when
due plus four percent (4%), but shall not exceed the maximum rate allowed by
law. Interest is payable in addition to the potential late charge provided for
in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than thirty (30) days after
Page 24
receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than thirty (30)
days are reasonably required for its performance, then Lessor shall not be in
breach if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or it having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Brokers' Fee.
15.1 Additional Commission. In addition to the payments owned pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project, if any, within which the Premises is
Page 25
located, (c) if Lessee remains in possession of the Premises, with the consent
of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased,
whether by agreement or operation of an escalation clause herein, then, Lessor
shall pay Brokers a fee in accordance with the schedule of said Brokers in
effect at the time of the execution of this Lease.
15.2 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Each Broker shall be a third party beneficiary of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions pertaining to this Lease when due, then such amounts
shall accrue interest. In addition, if Lessor fails to pay any amounts to
Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor fails to pay such amounts within ten (10)
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker.
15.3 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, project, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the Indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting Party, not more than one month's rent has
been paid in advance. Prospective purchasers and encumbrances may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by
Page 26
Lessor such financial statements as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past three (3) years. All such financial statements shall be received by Lessor
and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Except as provided in Paragraph 15,
upon such transfer or assignment and delivery of the Security Deposit, as
aforesaid, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the provisions
of Paragraph 20 below, the original Lessor under this Lease, and all subsequent
holders of the Lessor's interest in this Lease shall remain liable and
responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6 above.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to
Page 27
an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker's liability
shall not be applicable to any gross negligence of willful misconduct of such
Broker.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery of mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and marked with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.
26. No Right to Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately proceeding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
parties, but rather according to its fair meaning as a whole, as if both parties
had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and
Page 29
this Lease, including any options to extend the term hereof, will not be
disturbed so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises. Further, within sixty (60) days after the execution of
this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises, in the event that Lessor is unable to provide
the Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees.
Such fees may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or judgment.
The term, "Prevailing Party" shall include, without limitation, a Party or
Broker who substantially obtains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the other
Party or Broker of its claim or defense. The attorneys' fees award shall not be
computed in accordance with any court fee schedule, but shall be such as to
fully reimburse all attorneys' fees reasonably incurred. In addition, Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.
34. Signs. Except for ordinary "For Sublease" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. All signs
must comply with all Applicable Requirements.
Page 30
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an Invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgement that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requires the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.
37. Guarantor.
37.1 Execution. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
37.2 Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor's behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d)
written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
Page 31
39. Options.
39.1 Definition. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3 Multiple Options. In the event that Lessee has any multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given three (3) or more notices of separate Default, whether or not the
Defaults are cured, during the twelve (12) month period immediately preceding
the exercise of the Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall
Page 32
have no obligation whatsoever to provide same. Lessee assumes all responsibility
for the protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease is is not attached to this Lease.
Page 33
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
-------------------------------------------------------------------------------------------------------------------
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
---------
ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO
WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES, SAID INVESTIGATION
SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES,
THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES
FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO
-------
BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.
-------------------------------------------------------------------------------------------------------------------
The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
Executed at: San Francisco, California Executed at: San Francisco, California
-------------------------------- ---------------------------------------------
on: June 17, 1999 on: June 17, 1999
----------------------------------------- ------------------------------------------------------
By LESSOR: By LESSEE:
611 MISSION LLC, XXXXXXX & CO.,
---------------------------------------------- -----------------------------------------------------
a California limited liability company a California corporation
---------------------------------------------- -----------------------------------------------------
By: BEI Management LLC,
a California limited liability company By:
----------------------------------------- -------------------------------------------------------
Name Printed: its Manager, Name Printed:
------------------------------- ---------------------------------------------
Title: Xxxxxxx Enterprises LLC
--------------------------------------
a California limited liability company Title:
-------------------------------------- -----------------------------------------------------
By: /s/ Xxxxx Xxxx By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------- ------------------------------------------------------
Name Printed: Xxxxx Xxxx Name Printed: Xxxxx X. Xxxxxxx
------------------------------- ---------------------------------------------
Title: VP Title: President
-------------------------------------- ----------------------------------------------------
Address: Address:
-------------------------------------- -------------------------------------------------
---------------------------------------------- ----------------------------------------------------------
Telephone: ( ) Telephone: ( )
-------------------------- -------------------------------------
Facsimile: ( ) Facsimile: ( )
-------------------------- -------------------------------------
Federal ID No. Federal ID No.
-------------------------------- -------------------------------------------
NOTE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to
make sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE.
Page 33
NOTE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 000 Xx.
Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. (000) 000-0000.
Fax No. (000) 000-0000.
Page 35
ADDENDUM
TO
AMENDED AND RESTATED STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE-NET
THIS ADDENDUM TO RESTATED STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT
LEASE-NET (this "Addendum") shall constitute part of that Restated Standard
Industrial/Commercial Single-Tenant Lease-Net, dated as of June 17, 1999 (the
"Restated Lease"), by and between 611 Mission LLC, a California limited
liability company ("Lessor"), and Xxxxxxx & Co., a California corporation
("Lessee"). The Restated Lease and this Addendum are sometimes hereinafter
referred to as the "Lease."
RECITALS
A. Lessor and Lessee are parties to that certain Standard
Industrial/Commercial Single-Tenant Lease-Net, executed on or about September
30, 1998 (the "Office Lease"), as amended by that certain Addendum to Lease of
even date therewith ("Original Addendum"), as amended by that certain Amendment
No. 1 to Standard Industrial/Commercial Single-Tenant Lease-Net, dated as of
March 15, 1999 ("Amendment No. 1"), with respect to certain premises commonly
known as 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx. The Office Lease, the
Original Addendum and Amendment No. 1 are hereinafter cumulatively referred to
as the "Original Lease."
X. Xxxxxx and Lessee desire to amend and restate the Original Lease upon
the terms and conditions hereinafter set forth. All terms used herein and not
otherwise defined herein shall have the meanings set forth in the Lease.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Lease.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, Lessor and Lessee agree as
follows:
1. Amendment and Restatement. The Original Lease is hereby amended and
-------------------------
restated in its entirety by the Lease, and the Lease shall supersede and replace
the Original Lease.
2. Amendment to Paragraph 1.2 of the Restated Lease - Definition of
----------------------------------------------------------------
Premises. Paragraph 1.2 of the Restated Lease is hereby amended to add the
--------
following at the end of Paragraph 1.2:
"The Premises shall include the entire improvements, including the
building, on that certain land described in the legal description attached
hereto as Exhibit A, together with the improvements to be made by Lessor on
behalf of Lessee pursuant to the Work Letter attached hereto as Exhibit B
(the "Work Letter"). The exact boundaries of the Premises
shall extend to six floors of the building, the basement and mezzanine area
of the building, the exterior windows, the building perimeter walls, the
unfinished surface of the floor forming the basement and the roof of the
building, including any and all tenant improvements to be made after the
date of this Lease, the heating, ventilation and air conditioning systems,
and the electrical, plumbing, sewer, and other building systems servicing
the Premises (whether those systems are within the boundaries of the
Premises or outside the boundaries of the Premises), telephone facilities,
equipment, machinery, connections, pipes, ducts, conduits and wires leading
through the Premises. Notwithstanding anything to the contrary contained in
this Paragraph 1.2, the Premises shall not include the exterior portions of
the roof of the building and the structural elements of the building."
3. Amendment to Paragraph 1.3 of the Restated Lease - Commencement Date.
--------------------------------------------------------------------
Paragraph 1.3 of the Restated Lease is hereby amended to read as follows:
"The term of this Lease shall commence on the date (the "Commencement
Date") which is the date of Substantial Completion of the Work (as those
terms are defined the Work Letter). Unless sooner terminated as
hereinafter provided, the term of this Lease shall end on the date which is
240 months after the Commencement Date. Lessor shall not be liable to
Lessee for any loss or damage resulting from or arising out of any failure
or delay in the delivery of the Premises to Lessee for any reason
whatsoever, including, without limitation, Lessor's failure or inability to
complete the Work by July 31, 2000. Within thirty (30) days after the
Commencement Date, Lessor and Lessee shall, upon the date of Substantial
Completion of the Work, execute an amendment to this Lease setting forth
the actual Commencement Date and the actual Expiration Date and such other
information reasonably requested by Lessor. Failure to execute such
amendment shall not affect the actual Commencement Date and the Expiration
Date of the Lease."
4. Amendment to Paragraph 1.5 of the Restated Lease - Base Rent.
------------------------------------------------------------
Paragraph 1.5 of the Restated Lease is hereby amended to read as follows:
"1.5 Base Rent and Additional Base Rent. Lessee shall pay to Lessor
as rental for the Premises, at the times and in the manner hereinafter
provided, the following sums of money:
1.5.1. Base Rent. Base Rent shall be $38,333.33 per month (the
"Base Rent"), payable in advance on the Commencement Date and on or before
the first day of each and every successive calendar month during the term
hereof. If the term commences on other than the first day of a calendar
month, the first payment of minimum rent shall be appropriately prorated on
the basis of a 30-day month.
1.5.2. CPI Adjustment.
(a) On the first day of the fifth, tenth, and fifteenth
anniversary of the Lease (each such day being the "Adjustment Date"), the
Base Rent shall be the sum of: (i) the then Base Rent for the month
immediately preceding the Adjustment Date, plus (ii) the
-2-
product obtained by multiplying said Base Rent by the percentage increase
in the Index (as hereinafter defined) which is measured from (A) the Index
published for the month which is sixty (60) months (not including the month
of the Adjustment Date) immediately preceding the Adjustment Date to (B)
the Index published for the month immediately preceding the Adjustment
Date. Notwithstanding anything to the contrary contained in this paragraph
1.5.2, the adjusted Base Rent shall not be more than fifteen percent (15%)
of the Base Rent for the month immediately preceding the Adjustment Date
and not less than the Base Rent immediately preceding the Adjustment Date.
The Base Rent payable following an adjustment under the terms of this
paragraph 1.5.2 shall continue at the adjusted level until the next
Adjustment Date. Once determined, Lessor shall give Lessee written notice
of the Base Rent adjusted pursuant to this paragraph 1.5.2, subject to
retroactive adjustment to account for the adjusted Base Rent due for the
period between the Adjustment Date and the date notice is given by Lessor
to Lessee. Notwithstanding anything contained in this Lease to the
contrary, only the Base Rent shall be adjusted pursuant to this paragraph
1.5.2 and there shall be no adjustment to the Additional Base Rent (defined
hereinafter).
(b) For purposes herein, "Index" shall be the "Consumer Price
Indexes, Pacific Cities and U.S. City Average All Items Indexes, 1982-
0000x000, Xxx Xxxxxxxxx-Xxxxxxx-Xxx Xxxx," as published by the United
States Department of Labor's Bureau of Labor Statistics. In the event the
Index for the month immediately preceding the Adjustment Date, is not
available on the Adjustment Date, the adjustment shall be made retroactive
to the Adjustment Date as soon as it is available. Should the Bureau of
Labor Statistics discontinue the publication of the above Index, or publish
same less frequently, or alter same in some manner, then Lessor shall adopt
a substitute Index or substitute procedure which reasonably reflects and
monitors consumer prices, without necessity for amendment of this Lease.
1.5.3. Additional Base Rent. In addition to the Base Rent payable
hereunder, Lessee shall pay to Lessor as additional rent the amount of
$30,285.61 per month (the "Additional Base Rent") in the same manner as the
payment of Base Rent. Lessor and Lessee acknowledge and agree that the
Additional Base Rent represents a reasonable approximation of the total
Cost of the Work as of the date hereof (including, without limitation, the
Lessor's construction management/supervisory fee payable under paragraph 7
of the Work Letter) and amortized over a period of two hundred forty (240)
months and using an interest rate of eight and one-quarter of one percent
(8.25%) per annum. Pursuant to the Work Letter and subject to the terms and
conditions contained therein, the Additional Base Rent may be adjusted to
account for the actual Cost of the Work only in the event the actual Cost
of the Work is less than the Construction Cost Limitation, and for the
amounts of the disbursed Improvement Allowance (as all those terms are
defined in the Work Letter). The Additional Base Rent shall be the sum of
(a) $30,285.61 (or such adjusted amount in the event the actual Cost of the
Work is less than the Construction Cost Limitation), plus (b) the amount of
the disbursed Improvement Allowance amortized over a period of two hundred
forty (240) months and using an interest rate of eight and one-quarter of
one percent (8.25%) per annum.
-3-
By way of example only, if the total disbursed Improvement Allowance is
$1,200,000.00, the Additional Base Rent shall be $40,510.40 being the sum
of (i) $30,285.61, plus $10,224.79 ($1,200,000.00 amortized over 240 months
and using an interest rate of 8.25%).
Within thirty (30) days after the Commencement Date, Lessor shall deliver
to Lessee a statement calculating the final Additional Base Rent, the
actual, total Cost of the Work, and the amount of the disbursed Improvement
Allowance. Lessee shall pay the Additional Base Rent when due based on
Lessor's determination of the Additional Rent as indicated in Lessor's
notice, subject to retroactive adjustment. If Lessee in good faith
disputes Lessor's determination of Additional Base Rent as indicated in the
notice given by Lessor, Lessee shall so notify Lessor within ten (10) days
after Lessee receives Lessor's determination of Additional Base Rent, and
if such dispute is not resolved by negotiation between the parties within
thirty (30) days after Lessee's notice is given, the Additional Base Rent
shall be determined pursuant to paragraph 12 of this Addendum. Once so
determined, Lessor and Lessee shall execute an amendment to this Lease
setting forth the actual Additional Base Rent. Once determined, the
Additional Base Rent shall be a monthly constant payment to Lessor and
shall not be subject to rental adjustments under Paragraph 1.5.2. of this
Lease.
1.5.4. Payment of Rent. All payments due from Lessee to Lessor
hereunder shall be paid to Lessor, without deduction, recoupment, offset or
counterclaim, and without relief from any valuation or appraisement laws,
and in lawful money of the United States of America at Lessor's address for
notices hereunder, or to such other person or at such other place as Lessor
may from time to time designate in writing to Lessee."
5. Amendment to Paragraph 12.1 of the Restated Lease -- Assignment and
-------------------------------------------------------------------
Subletting.
----------
a. Paragraph 12.1 of the Restated Lease is hereby amended to read as
follows:
"12.1 Right of Lessee to Assign or Sublet. Notwithstanding anything
-----------------------------------
to the contrary in this Paragraph 12.1, Lessee may assign this Lease or
sublet the Premises, without the consent of Lessor, provided: (a) Lessee
gives Lessor written notice of such assignment at least 20 days prior to
the effective date of such assignment; (b) such assignment will not result
in a change of use of the Premises; (c) at no cost to Lessor and Lessor
shall have no obligation to improve, or provide Lessee with allowance for
improvement of, the Premises; (d) any such assignment shall not waive any
breach of the Lease or any of the rights of Lessor thereunder, or enlarge
Lessor's obligations under the Lease; (e) the assumption by Lessee's
assignee of the Lease will not release or discharge Lessee from any
liability under the Lease, including, without limitation, the payment of
rent and other amounts when due under the Lease; (f) Lessee will remain
liable and responsible for the full performance and observance of all the
provisions, covenants, and conditions in the Lease to be performed and
observed by Lessee; and (g) Lessee and such assignee shall indemnify,
defend and hold Lessor harmless from any and all claims, demands,
proceedings, actions, liens, orders or judgments arising out of or relating
to such assignment."
-4-
b. Paragraphs 12.2 (Terms and Conditions Applicable to Assignment
and Subletting) and 12.3 (Additional Terms and Conditions Applicable to
Subletting) of the Restated Lease are hereby deleted.
6. Amendment to Paragraph 15.2 -- Assumption of Obligation. Paragraph
-------------------------------------------------------
15.2 of the Restated Lease is hereby amended to add at the end of Paragraph 15.2
the following:
"Notwithstanding anything to the contrary contained in this Paragraph 15.2,
in the event Lessee exercises the option to purchase the Property in the
manner provided herein, Lessee shall have no obligation to assume Lessor's
obligation to pay any real estate commission payable hereunder."
7. Amendment to Paragraph 34 of the Restated Lease -- Signs. Paragraph
--------------------------------------------------------
34 of the Restated Lease is hereby amended to add the following sentence at the
end of paragraph 34:
"Subject to the preceding sentences, Lessee shall have exclusive signage
rights on the exterior of the building of the Premises, provided: (a)
Lessee shall at its sole cost and expense install, repair, maintain and
remove any such signs and, if applicable, restore the building and repair
any damage caused by the removal of the sign and (b) Lessee indemnify,
defend, and hold Lessor harmless from any and all claims, demands,
proceedings, actions, liens, orders or judgments arising out of or relating
to any such signs."
8. Amendment to Paragraph 39 of the Restated Lease -- Options. Paragraph
----------------------------------------------------------
39 of the Restated Lease is hereby amended to read as follows:
"39. Options to Extend.
39.1. Lessee shall have the option to extend the term of the Lease
for 2 successive periods of 5 years after the expiration of the initial 20-
year term (each such period is hereafter referred to as an "Extension
Term"), subject to the following conditions:
a. Each option to extend shall only be exercised by written
notice of exercise given to Lessor not sooner than 9 months and not later
than 6 months prior to the expiration of the applicable Extension Term.
The option of the second Extension Term shall be of no force or effect if
Lessee has not validly exercised the option for the first Extension Term.
b. At the time the option to extend is exercised and at the
commencement of the applicable Extension Term, the Lease shall be in full
force and effect, and Lessee shall not then be in default under the Lease,
or would be in default but for any applicable cure or grace periods; and
c. Lessee has not assigned this Lease.
-5-
If Lessee fails to exercise an option to extend in the manner set forth
hereunder, any purported exercise shall be null and void and of no force or
effect, and the option to extend shall terminate and be deemed waived by
Lessee.
39.2. In the event the option to extend is timely exercised by
Lessee, the term of the Lease shall be extended 5 years after the
expiration of the initial term of the Lease, in the case of the exercise of
the option to extend for the first Extension Term, and 5 years after the
expiration of the first Extension Term, in the case of the exercise of the
option to extend for the second Extension Term, upon all of the terms and
conditions of the Lease, provided that (1) there shall be no further option
to extend the term of the Lease in the event Lessee has validly exercised
the option to extend for the first Extension Term and the second Extension
Term; (2) the Base Rent for each Extension Term shall be the Base Rent for
the month immediately preceding the applicable Extension Term, plus (ii)
the product obtained by multiplying said Base Rent by the percentage
increase in the Index (as hereinafter defined) which is measured from (A)
the Index published for the month which is sixty (60) months (not including
the month of the commencement of the applicable Extension Term) immediately
preceding the commencement of the applicable Extension Term to (B) the
Index published for the month immediately preceding the commencement of the
applicable Extension Term; (3) Lessor shall have no obligation to improve,
or provide Lessee with allowances for improvement of, the Premises; and (4)
Lessee shall have no obligation to pay the Additional Base Rent during any
Extension Term."
9. Net Lease.
---------
a. The term "Operating Expenses" shall mean all costs of management,
operation and maintenance of the Premises, including, without limitation,
janitorial, maintenance, guard and other services; rent or rental value of any
management office of the Premises; power, water, sewer, garbage, waste disposal
and all other utilities; materials and supplies; maintenance and repairs;
license, permit and inspection fees; compliance with laws and governmental
regulations; insurance premiums and the deductible portion of any insured loss
under Lessor's insurance, such insurance may include, without limitation,
casualty (including, without limitation, extended and broad form coverage risks,
flood and earthquake), public liability, worker's compensation, and rental loss
insurance; supplies, tools, equipment and fixtures used in the management,
operation and maintenance of the Premises, including, without limitation,
furniture and artwork provided by Lessor; all costs and expenses, including,
without limitation, attorneys' fees (except as expressly excluded below) of
contesting by appropriate legal proceedings any matter concerning operating or
managing the Premises or the amount or validity of any Real Property Taxes;
provided, however, in no event shall Lessee be responsible for the payment of
property management fees so long as Lessee directly contracts with service
providers to the Premises and is solely responsible for the day-to-day
management of the Premises.
b. It is the intent of Lessor and Lessee to have Lessee pay for all
expenses of Lessee's use and occupancy of the Premises. Accordingly, Lessee
shall pay Lessor as additional rent all Operating Expenses. From time to time,
Lessor may deliver to Lessee a statement of the
-6-
Operating Expenses incurred by Lessor. Lessee shall pay to Lessor in the same
manner as Base Rent is payable under the Lease the amount due under such
statement of Operating Expenses within fifteen (15) days after Lessor delivers
to Lessee such statement of Operating Expenses. Under no circumstances, whether
now existing or hereafter arising, and whether or not beyond the present
contemplation of the parties, shall Lessor be expected or required to make any
payment of any kind whatsoever with respect to Lessee's use or occupancy of the
Premises or this Lease, except as may otherwise be expressly set forth herein.
10. Option to Purchase.
------------------
a. Lessee shall have the option to purchase (the "Option to
Purchase") the real property of which the Premises are a part (the "Property"),
subject to the following conditions:
i. The Option to Purchase shall only be exercised by written
notice of exercise given to Lessor after the date of the Lease, but not later
than the last day of the fifth anniversary year of the Lease (the "Option
Period").
ii. At the time the Option to Purchase is exercised, the Lease
shall be in full force and effect, and Lessee shall not then be in default under
Paragraph 13.1, subdivisions (a), (b) or (e) of the Lease; and
iii. Lessee has not assigned this Lease.
b. In the event the Option to Purchase is timely exercised by
Lessee, Lessor shall, within 10 days after the date of the Option to Purchase is
exercised by Lessee, deliver to Lessee a Purchase and Sale Agreement prepared by
Lessor's counsel, which Purchase and Sale Agreement shall provide:
i. the closing date shall be no later than 60 days after the
date of Lessee's exercise of the option to purchase;
ii. the purchase price shall be the sum of (A) (1) if the Option
to Purchase is exercised after the Commencement Date but before the last day of
the first anniversary year of the Lease, $5,075,000.00, (2) if before the last
day of the second anniversary year of the Lease, $5,175,000.00, (3) if before
the last day of the third anniversary year of the Lease, $5,475,000.00, (4) if
before the last day of the fourth anniversary year of the Lease, $5,675,000.00,
and (5) if before the last day of the fifth anniversary year of the Lease,
$5,875,000.00, plus (B) the unamortized balance as of the closing date of the
Cost of Work and the disbursed Improvement Allowance, as those terms are defined
in the Work Letter. Lessor shall deliver to Lessee within ten (10) days after
receipt of Lessee's notice of exercise of the Option to Purchase its calculation
of the purchase price of the Property. If Lessee in good faith disputes
Lessor's calculation of the purchase price, Lessee shall so notify Lessor within
ten (10) days after Lessee receives Lessor's calculation, and if such dispute is
not resolved by negotiation between the parties within thirty (30) days after
Lessee's notice is given, the purchase price shall be determined pursuant to
paragraph 12 of this Addendum. Once so determined, Lessor and Lessee shall
execute an amendment to the purchase and sale
-7-
agreement setting forth the purchase price for the Property. For purposes of
this paragraph 12(b)(ii), the first anniversary year of the Lease shall be the
12-month period after the Commencement Date. By way of example and for
illustrative purposes only:
Example 1: If the Option to Purchase is exercised on the Commencement
---------
Date, the Cost of the Work is $3,500,000.00, the interest rate is 8.25%,
the disbursed Improvement Allowance is $1,200,000.00, then the Purchase
Price will be calculated as follows:
Cost of Work $3,500,000.00
Improvement Allowance $1,200,000.00
Property Price $5,075,000.00
-------------
Purchase Price $9,775,000.00
=============
Example 2: If the Option to Purchase is exercised on the twenty fifth
---------
(25th) month, the Cost of the Work is $3,300,000.00, the interest rate is
8.25%, the disbursed Improvement Allowance is $1,000,000.00, then the
Purchase Price will be calculated as follows:
Unamortized balance of $3,152,419.00
Cost of Work
(Cost of Work $3,300,000.00
less portion
of amortized principal
$147,581.00)
Unamortized balance of
Improvement $ 955,279.00
Allowance (Improvement
Allowance of
$1,000,000, less portion of
amortized
principal $44,721.00)
Property Price $5,475,000.00
-------------
Purchase Price $9,582,698.00
=============
iii. the sale of the Property shall be on an "As Is and With All
Faults" basis and Lessor shall not be required to make any representations or
warranties with respect to the Property and Lessee shall release Lessor from any
and all claims arising out of the Property upon the closing; and
iv. Lessee and Lessor shall reasonably cooperate with each other on
causing the sale of the Property to qualify as a tax-deferred exchange under
Section 1031 of the Internal Revenue Code; provided, however, that (a) either
party shall not be required to expend any sums or otherwise incur any liability
in connection with the exchange for the benefit of the other party; (b) the
closing shall in no event be delayed because of such exchange; and (c) each
party agrees to defend, indemnify and hold harmless the other party from and
against any and all costs, damages, claims, liabilities or expenses (including,
without limitation, attorney's fees and costs) arising out of or relating to any
aspect of such tax-deferred exchange for the benefit of the other party.
-8-
x. Xxxxxx and Lessee acknowledge and agree that the purchase price
provided in this paragraph 12 was determined as consideration for Lessee
entering into the Lease and not as the parties' agreement as to the fair market
value of the Property. The fair market value of the Property, however
determined, may be more than the purchase price provided in this paragraph 12
and the purchase price shall not be a conclusive determination of the fair
market value of the Property upon either party.
x. Xxxxxx and Lessee agree that in the event Lessee exercises the
Option to Purchase, the proceeds payable to Lessor shall be applied first to the
repayment of any indebtedness owed by Lessor to Golden Gate Bank, Mid-Peninsula
Bank, or their assigns, as beneficiary, which indebtedness is secured by a deed
of trust executed by Lessor and recorded against the Property, or to any
indebtedness of any lender making a loan, the proceeds of which are used in
whole or in part to refinance such indebtedness.
11. Lessor's Financing.
------------------
a. Lessor intends to obtain further financing for the building,
portions thereof, and the operation thereof, secured by mortgages or deeds of
trust encumbering the building. If any mortgage lender should require, as a
condition to such financing, or pursuant to rights of approval set forth in the
mortgage or deed of trust encumbering the building, any modification of the
terms or conditions of this Lease, Lessee agrees to execute such modification or
amendment, provided that, such modification or amendment (a) shall not increase
the rental or Lessee's share of any costs in addition to Base Rent, and (b)
shall not materially interfere with Lessee's use or occupancy of the Premises.
x. Xxxxxx and Lessee acknowledge and agree that Lessor will obtain
further financing for the Property in order to facilitate the construction of
tenant improvements. In connection therewith, Lessor is obtaining a loan from
Golden Gate Bank and/or Mid-Peninsula Bank in a principal amount of
approximately $6,225,000.00, which will be secured by a deed of trust recorded
against the Property. Lessee agrees to cooperate with Lessor's efforts to
obtain such loan.
12. Mediation and Arbitration.
-------------------------
a. In the event Lessee disputes Lessor's determination of Additional
Base Rent or of the purchase price of the Property pursuant to paragraph 10
hereof, and the parties are unable to resolve such dispute within thirty (30)
days after Lessor's notice of such determination, such dispute shall be resolved
by final and binding arbitration administered by and in accordance with the
rules and procedures of JAMS/Endispute, and each party irrevocably and
unconditionally waives any rights it may have to have the dispute litigated in a
court or jury trial. Judgment upon any award rendered by the arbitrator may be
entered by any state or federal court haying jurisdiction thereof. The
arbitration proceedings shall be conducted in San Francisco, California. The
provisions of California Code of Civil Procedure Section 1283.05 or its
successor section shall be incorporated and made a part hereof. Before and
during arbitration, the parties shall equally share in the expenses of the
arbitration, including administrative expenses and the arbitrator's fee.
-9-
b. The arbitrator shall, at the time of rendering an award, make an
award under paragraph 31 of the Restated Lease hereof, including, but not
limited to, attorneys' fees, costs and reimbursement to the prevailing party of
the expenses shared for arbitration under this paragraph 12, and assess such
expenses as the arbitrator deems appropriate.
13. Construction. In the event of a conflict between the Restated Lease,
------------
the Work Letter and this Addendum, the terms and conditions of this Addendum
shall prevail.
14. No Default. Each party hereby certifies and confirms that, to its
----------
knowledge, the other party is not in default as of the date of execution hereof
in the performance of any obligation to be performed by the other party to date
under the Lease.
15. Integration. The Restated Lease and this Addendum set forth the
-----------
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any other oral or written agreements or
undertakings by and between the parties reached or made prior to the date hereof
with respect to the subject matter hereof.
16. Attornment. Paragraph 30.2 of the Restated Lease is hereby deleted,
----------
and replaced in its entirety by the following provision:
"30.2. Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, if the Lessor's interest is transferred to or acquired by
and owned by a Lender or any successor of the Lender or other party
("Acquiring Party") because of foreclosure of a Security Device, sale under
a private power from a deed of trust, other proceedings brought by Lender,
or by any other manner, and Acquiring Party succeeds to Lessor's interest
under the Lease, Lessee shall be bound to the Acquiring Party and Acquiring
Party shall be bound to Lessee under all of the terms, covenants, and
conditions of the Lease for the balance of the remaining term, including
any extensions or renewals, with the same effect as if Acquiring Party were
Lessor under the Lease. Lessee agrees to attorn to Acquiring Party as the
Lessor, with the attornment being effective and self-operable immediately
upon Acquiring Party succeeding to the interest of Lessor under the Lease,
all without the execution by the parties of any further instruments.
However, Acquiring Party shall not: (i) be liable for any act or omission
of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor; or (iii) be bound by prepayment
of more than one (1) month's rent."
17. Ratification and Confirmation. Except as amended or modified hereby,
-----------------------------
all terms, covenants and conditions of the Lease as heretofore in effect shall
remain in full force and effect and are hereby ratified and confirmed in all
respects.
18. Counterparts. This Addendum may be executed in two or more
------------
counterparts and/or by facsimile, and will become effective and binding upon the
parties at such time as all of the signatories hereto have signed a counterpart
hereof. All counterparts so executed shall constitute one agreement binding on
all parties to this Addendum, notwithstanding that all parties are not
signatories to the original or the same counterpart. Each of the parties hereto
shall sign a sufficient number of counterparts so that each party shall receive
a fully executed original of this Addendum.
-10-
IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Addendum as
of the day and year first above written.
LESSEE: LESSOR:
XXXXXXX & CO., 611 MISSION LLC,
a California corporation a California limited liability company,
By: /s/ Xxxxx X. Xxxxxxx By: BEI Management LLC,
-------------------- a California limited liability company,
its Manager
Its: President
---------
By: Xxxxxxx Enterprises LLC,
a California limited liability
company,
its Manager,
By: /s/ Xxxxx Xxxx
-------------------------
Its: VP
------------------------
-11-
EXHIBIT A
LEGAL DESCRIPTION
-----------------
Beginning at a point on the southeasterly line of Mission Street, distant
thereon 99.167 feet northeasterly from the northeasterly line xx Xxx Xxxxxxxxxx
Xxxxxx; thence northeasterly along said line of Mission Street 41.083 feet to
point distant thereon 76.833 feet southwesterly from the southwesterly line of
Second Street; thence southwesterly at a right angle to said line of Mission
Street 40 feet; thence at a right angle southwesterly 0.667 feet; thence at
right angle southeasterly 120.167 feet to the northwesterly line of Minna
Street; thence at a right angle southwesterly along said line of Minna Street
40.166 feet to a point distant thereon 99.417 feet northeasterly from the
northeasterly line of New Xxxxxxxxxx Street, said point being the southeast
corner of Lot 73, as said Lot is described in that certain grant deeded recorded
July 1, 1998, in Book H166, Page 747, Official Records of the City and County of
San Francisco; thence along the northeasterly line of said Lot 73, as said Lot
is described in said grant deed the following courses and distances;
northwesterly at a right angle to said line of Xxxxx Xxxxxx 00 feet; thence at a
right angle southwesterly 0.25 feet; thence at a right angle northwesterly
79.167 feet to the point of beginning.
EXHIBIT B
AMENDED AND RESTATED WORK LETTER
--------------------------------
This Amended and Restated Work Letter (this "Work Letter") is executed
simultaneously with that certain Addendum to Amended and Restated Standard
Industrial/Commercial Single-Tenant Lease-Net, dated as of June 17,1999 (the
"Lease"), between Xxxxxxx & Co., a California corporation, as "Lessee," and 611
Mission LLC, a California limited liability company, as "Lessor," relating to
demised premises ("Premises") at the building located at the street address as
000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the "Building"), which Premises
are more fully identified in the Lease. Capitalized terms used herein, unless
otherwise defined in this Work Letter, shall have the respective meanings
ascribed to them in the Lease.
For and in consideration of the agreement to lease the Premises and the
mutual covenants contained herein and in the Lease, Lessor and Lessee hereby
agree as follows:
1. Lessee's Plans; the Work. Lessee desires Lessor to perform certain
------------------------
leasehold improvement work in the Premises in substantial accordance with the
plans, working drawings, and other specifications and details (collectively, the
"Plans"), more particularly described in Schedule 1 attached to this Work Letter
----------
and made a part hereof. Such work, as shown in the Plans shall be hereinafter
referred to as the "Work." Neither the approval by Lessor of the Work or the
Plans or, any other plans, drawings, specifications or other items associated
with the Work nor Lessors performance, supervision or monitoring of the Work
shall constitute any warranty by Lessor to Lessee of the adequacy of the design
for Lessee's intended use of the Premises.
2. Performance of the Work; Allowance. Except as hereinafter provided to
----------------------------------
the contrary, Lessor shall cause the Work to be constructed and completed.
Lessor shall pay for the "Cost of the Work" (as defined below) in an amount not
to exceed $3,554,375.00 (the "Construction Cost Limitation"). Lessee shall not
be entitled to any credit, abatement or payment from Lessor in the event that
the amount of Construction Cost Limitation specified above exceeds the Cost of
the Work. For purposes of this Work Letter, the term "Cost of the Work" shall
mean and include (a) any and all cost or expense arising out of or relating to
the Work or the construction thereof, (b) all fixtures or furnishings or other
items of personal property purchased for the benefit of Lessee, (c) such other
costs and expenses incurred by Lessor as necessary to adapt the Building or the
Premises for Lessee's use, including without limitation, permit fees, fees and
costs of architects and engineers, Lessor's construction management and
supervision fee as provided in Paragraph 7 hereof, and (d) any and all cost or
expense arising out of or relating to any financing expenses or other charges
(including, without limitation, points, loan fees, appraisal fees and such other
financing costs) incurred by Lessor in connection with a loan (the "Improvement
Loan") for the construction or effecting of any improvements made to the
Building or the Premises in an amount not to exceed $5,750,000.00. In the event
the Cost of Work exceeds Construction Cost Limitation, the provisions of
Paragraph 6 shall apply. Upon substantial completion of the Work, Lessor shall
have no further obligation to improve, or provide Lessee with allowances for
improvement of, the Premises, except those punch list items as provided in
Paragraph 4 hereof.
3. Payment. Prior to commencing the Work, Lessor shall submit to Lessee
-------
a written statement of the total Cost of the Work (which shall include the
amount of any overtime projected as necessary to substantially complete the Work
by the Commencement Date specified in the Lease) as then known by Lessor.
Lessee agrees, within three (3) days after submission to it of such statement,
to execute and deliver to Lessor, in the form then in use by Lessor, an
authorization to proceed with the Work. No Work shall be commenced until Lessee
has fully complied with the preceding provision of this Paragraph 3. In the
event, and each time, that any change order by Lessee, unknown field condition,
delay caused by acts beyond Lessor's control or other event or circumstance
causes the Cost of the Work to be increased after the time that Lessor delivers
to Lessee the aforesaid initial statement of the Cost of the Work, Lessor shall
deliver to Lessee a revised statement of the total Cost of the Work, indicating
the revised calculation of the excess costs, if any. Within three (3) days
after submission to Lessee of any such revised statement, Lessor shall not be
required to proceed further with the Work until Lessee has authorized Lessor to
proceed with the Work and Lessor and Lessee have entered into a written
agreement with respect to the payment of such excess costs.
4. Substantial Completion. Lessor shall cause the Work to be
----------------------
"substantially completed," subject to delays caused by strikes, lockouts,
boycotts or other labor problems, casualties, discontinuance of any utility or
other service required for performance of the Work, unavailability or shortages
of materials or other problems in obtaining materials necessary for performance
of the Work or any other matter beyond the control of Lessor (or beyond the
control of Lessor's contractors or subcontractors performing the Work). The
Work shall be deemed to be "substantially completed" (the "Substantial
Completion of the Work") for all purposes under this Work Letter and the Lease
if and when Lessor's architect issues a written certificate to Lessor and
Lessee, certifying that the Work has been substantially completed (i.e.,
completed except for "punchlist" items listed in such architect's certificate)
in substantial compliance with the Plans, or when Lessee first takes occupancy
of the Premises, whichever first occurs. Subject to the excusable delays
described in the first sentence of this paragraph, the Work shall be
substantially completed no later than July 31, 2000.
5. Additional Work. Upon Lessee's request and submission by Lessee (at
---------------
Lessee's sole cost and expense) of the necessary information and/or plans and
specifications for work other than the Work described in the Plans (the
"Additional Work") and the approval by Lessor of such Additional Work, which
approval Lessor agrees shall not be unreasonably withheld, Lessor shall perform
such Additional Work, subject, however, to the following provisions of this
Paragraph 5 and Paragraph 6. Prior to commencing any Additional Work requested
by Lessee, Lessor shall submit to Lessee a written statement of the cost of such
Additional Work, which cost shall include a fee payable to Lessor in the amount
of 7.00% of the total cost of such Additional Work as compensation to Lessor for
monitoring the Additional Work and for administration, overhead and field
supervision associated with the Additional Work (such fee being hereinafter
referred to as "Lessor's Additional Compensation"), and, concurrently with such
statement of cost, Lessor shall also submit to Lessee a proposed Lessee extra
order (the "TEO") for the Additional Work in the standard form then in use by
Lessor. Lessee shall execute and deliver to Lessor such TEO, within five (5)
days after Lessor's submission of such statement and TEO to Lessee. If Lessee
fails to execute or deliver such TEO,
-2-
then Lessor shall not be obligated to do any of the Additional Work and may
proceed to do only the Work, as specified in the Plans. Notwithstanding anything
contained herein to the contrary and in the event the sum of the Lessor's
Additional Compensation, the cost of the Additional Work, plus the cost of the
Work exceed Construction Cost Limitation, then the provisions of Paragraph 6
shall apply. Lessor shall not be deemed to have acted unreasonably if it
withholds its approval of any Additional Work because, in Lessor's reasonable
opinion the Additional Work, as the case may be: (a) is likely to adversely
affect Building systems, the structure of the Building or the safety of the
Building and/or its occupants; (b) might impair Lessor's ability to furnish
services to Lessee; (c) would increase the cost of operating the Building; (d)
would violate any governmental laws, rules or ordinances (or interpretations
thereof); (e) contains or uses hazardous or toxic materials or substances; (f)
would adversely affect the appearance of the Building; (g) is prohibited by any
mortgage, trust deed or other instrument encumbering the Building; or (h) is
likely to be substantially delayed because of unavailability or shortage of
labor or materials necessary to perform such work or the difficulties or unusual
nature of such work. The foregoing reasons, however, shall not be the only
reasons for which Lessor may withhold its approval, whether or not such other
reasons are similar or dissimilar to the foregoing.
6. Costs Exceeding Allowance. In the event either (a) the Cost of the
-------------------------
Work, for whatever reason and at any time prior to substantial completion of the
Work, exceeds Construction Cost Limitation or (b) the Cost of the Work, the cost
of the Additional Work, plus the Lessor's Additional Compensation exceed the
Construction Cost Limitation (such costs exceeding Construction Cost Limitation
shall hereinafter be referred to as the "Excess Costs"), then Lessee will pay
Lessor the Excess Costs within twenty (20) days after written demand therefor by
Lessor.
7. Charges and Fees. Lessee shall pay Lessor a construction
----------------
management/supervisory fee in an amount equal to seven percent (7.00%) of the
Cost of the Work (and all change orders with respect thereto) to defray Lessor's
administrative and overhead expenses incurred to review the Plans and coordinate
with architects, engineers, general contractors and, if necessary, the Lessee's
on-site project manager regarding the staging and progression of the Work. The
charges and fees payable under this Paragraph 7 is included within the
calculation of the Additional Rent (as defined in the Restated Lease) and shall
be a part of the Construction Cost Limitation. Unless Lessee requests the
construction services of Lessor, Xxxxxxx Enterprises LLC, a California limited
liability company, or its affiliates, Lessor shall not charge Lessee a
construction management/supervision fee for the further alterations contemplated
by Lessee pursuant to Paragraph 8 below.
8. Lessee Improvement Allowance. In order to make portions of the
----------------------------
Premises suitable for subtenants of Lessee, Lessor and Lessee acknowledge that,
prior to May 1, 2001, Lessee intends to effect further Alterations to the
Premises, in accordance with and subject to the provisions of Paragraph 7.3 of
the Lease. During the period specified in this paragraph, Lessor shall make
available to Lessee up to, but not in excess of, One Million Two Hundred
Thousand Dollars ($1,200,000.00) (the "Improvement Allowance") for use in
connection with Lessee's alterations to the Premises. The "Improvement
Allowance" may not be used by Lessee to purchase machines, equipment, furniture,
inventory, or other movable personal property. From time to time on Lessee's
request after October 1, 1999, but not more frequently than once per month,
Lessor shall pay to
-3-
Lessee the cost of the Alterations then constructed or installed in the
Premises, but not to exceed the Improvement Allowance, provided that Lessee
shall have first furnished to Lessor evidence reasonably satisfactory to Lessor,
including mechanics' lien releases, that all of the Alterations covered by each
payment request have been completed and have been or will as a result of
Lessor's payment be paid for in full by Lessee. The amount paid by Lessor
pursuant to this paragraph shall be added to and be a part of the Additional
Rent. Notwithstanding anything to the contrary contained herein, Lessor shall
not be obligated to make any payment for so long as any default of Lessee under
the Lease remains uncured. Any request for payment by Lessor to Lessee under
this paragraph must be made no later than July 31, 2000.
9. Lease Provisions. In the event of any conflict between this Work
----------------
Letter and the Lease, the terms and conditions of the Lease shall prevail. All
amounts payable by Lessee to Lessor hereunder shall be deemed to be additional
rent under the Lease and, upon any default in the payment of same, Lessor shall
have all of the rights and remedies provided for in the Lease.
10. Exculpation of Lessor. Notwithstanding anything to the contrary
---------------------
contained in this Lease or in any exhibits or addenda hereto attached
(collectively, the "Lease Documents"), it is expressly understood and agreed by
and between the parties hereto that: (a) the recourse of Lessee or its
successors or assigns against Lessor with respect to the alleged breach by or on
the part of Lessor of any representation, warranty, covenant, undertaking or
agreement contained in any of the Lease documents or otherwise arising out of
Lessee's use of the Premises or the Building (collectively, "Lessor's Lease
Undertaking"') shall extend only to Lessor's interest in the real estate of
which the Premises demised under the Lease Documents are a part ("Lessor's Real
Estate") and not to any other assets of Lessor or its beneficiaries; and (b) no
personal liability or personal responsibility of any sort with respect to any of
Lessor's Lease Undertakings or any alleged breach thereof is assumed by, or
shall at any time be asserted or enforceable against Lessor or against any of
their respective directors, officers, employees, agents, constituent partners,
beneficiaries, trustees or representatives.
IN WITNESS WHEREOF, this Work Letter Agreement is executed as of June 17,
1999.
LESSEE: LESSOR:
XXXXXXX & CO., 611 MISSION LLC,
a California corporation a California limited liability company,
By: /s/ Xxxxx X. Xxxxxxx By: BEI MANAGEMENT LLC,
-------------------- a California limited liability
company,
Its: President its Manager,
-------------------
By: Xxxxxxx Enterprises LLC,
a California limited liability
company,
its Manager,
By: /s/ Xxxxx Xxxx
------------------------------
Xxxxx Xxxx
VP
-4-
SCHEDULE 1
TO
AMENDED AND RESTATED WORK LETTER
Structural Drawings:
Sheet #'s: X-0, X-0, X-0, X-0, S-5, X-0, X-0, X-0, X-0 Dated 2/2/99
Sheet #'s: X-00, X-00, X-00, X-00 Dated 3/26/99
T1 Drawings:
Sheet #'s: XX-0.0, XX-0.0, XX-0.0, XX-0.0, 1A-0.0., 1A-2.0, 1A-3.0, 1A-4.0, 2A-
0.0, 2A-2.0, 2A-3.0, 2A-4.0, 2A-5.0 Dated 2/24/99
Base Building Drawings:
Sheet #'s: A-O.O, A-0.1, A-0.2, 0A-1.0, 1A-1.0, 2A-1.0. 3A-1.0, 4A-1.0, 5A-1.0,
6A-1.0, 7A-1.0, 8A-1.0, X-0.0, X-0.0, X-0.0, X-0.0, X-0.0, X-0.0, X-0.0, REF-1
Dated 4/2/99
EXHIBIT C
WORK LETTER AND CONSTRUCTION AGREEMENT FOR SUBTENANT
IMPROVEMENTS 000 XXXXXXX XXXXXX, XXXXX 000 THROUGH 700
This Work Letter and Construction Agreement for Initial Improvement of the
Premises ("Work Letter") is attached to and incorporated within that certain
Sublease ("Sublease") between Xxxxxxx & Co., Inc., a California corporation
("Sublandlord"), and Andromedia, Inc., a California corporation ("Subtenant").
RECITALS
WHEREAS, the undersigned Sublandlord and Subtenant have executed and
delivered the Sublease to which this Work Letter is attached, and into which
this Work Letter is fully incorporated by reference;
WHEREAS, the Sublease provides for the leasing of space (the "Premises")
within 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (hereinafter referred to as
the "Building");
WHEREAS, Sublandlord and Subtenant desire to set forth herein their
respective agreements regarding the improvement of the Premises;
NOW, THEREFORE, in consideration of the foregoing recitals, the execution
and delivery of the Sublease by the parties hereto, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublandlord and Subtenant,
intending to be legally bound, hereby agree as follows:
Section 1. DEFINITIONS.
1.1. Defined Terms. Capitalized terms used in the Sublease and this Work
-------------
Letter shall have the same meanings ascribed to them in the Sublease. Otherwise,
the capitalized terms used in this Work Letter shall have the meaning ascribed
to them at the point where defined.
1.2. "Base Building Improvements" shall mean the improvements to the
--------------------------
Building provided by Sublandlord, shown in the Base Building Plans.
1.3 "Base Building Plans" shall mean the improvements plan approved by
-------------------
Sublandlord and Subtenant and attached hereto as Exhibit C-1 for the
construction and installation of the Base Building Improvements for the
Building.
1.4 "Subtenant Improvements" shall mean the improvements constructed and
----------------------
installed in the Premises by Sublandlord in accordance with the Subtenant
Improvement Working Drawings.
1.5 "Subtenant Improvement Plan" shall mean the space plan for the
--------------------------
Subtenant Improvements attached hereto as Exhibit C-2.
1.6 "Improvements" shall mean the combined Base Building Improvements and
------------
the Subtenant Improvements.
1.7 "Punch List Items" shall mean minor details of construction or
----------------
decoration or mechanical adjustments that do not materially interfere with
Subtenant's occupancy of the Premises for the use of the Premises as provided in
the Sublease.
1.8 "Contractor" shall mean IN:SITE Design Build Associates.
----------
1.9 "Architect" shall mean IN:SITE Design Build Associates.
---------
1.10 "Sublandlord's Allowance" shall mean the up to Twenty-five dollar
-----------------------
($25) per rentable square foot amount set forth in Section 19 of the Sublease.
1.11 "Sublandlord's Additional Allowance" shall mean the up to Fifteen
----------------------------------
dollar ($15) amount set forth in Section 19 of the Sublease to be repaid by
Subtenant monthly, as additional rent, in an amount calculated by fully
amortizing the Sublandlord's Additional Allowance over the remaining Sublease
Term with interest at ten percent (10%) per annum. If additional rent is due by
Subtenant's use of the Sublandlord's Additional Allowance, the parties will
execute an amendment to the Sublease to set forth the increased amount.
1.12 "Allowance" shall mean the combined Sublandlord's Allowance and
---------
Sublandlord's Additional Allowance representing Sublandlord's contribution
(subject to reimbursement of the Additional Allowance as set forth in Section 19
of the Sublease) toward the construction of the Subtenant Improvements to be
applied toward all expenses associated with the construction, space planning,
engineering, construction drawings, construction management, signage and other
necessary permits directly associated with the Subtenant Improvements. Under no
circumstances shall the Allowance be used for Subtenant's due diligence review
of the Premises (or this Sublease) nor the design, acquisition or planning costs
of Subtenant's personal property, furniture, trade fixtures or equipment.
1.13 "Subtenant Improvement Costs" shall mean the total cost of (i) the
---------------------------
preparation of the Subtenant Improvement Working Drawings, (ii) the construction
and installation of the Subtenant Improvements, (iii) payment to Sublandlord of
a fee equal to three percent (3%) times the total amount of the foregoing items,
for services in supervising and administering the construction and installation
of the Subtenant Improvements and (iv) all other construction costs associated
improving the Premises for Subtenant's occupancy excluding the Base Building
Improvements.
1.14 "Subtenant Costs" shall mean the excess, if any, between the approved
---------------
Subtenant Improvement Cost Estimate (as defined in 2.2) as the same may be
adjusted by Change Orders to the Improvements requested or approved by
Subtenant, over the Allowance.
1.15 "Substantial Completion of the Improvements in the Premises" shall
----------------------------------------------------------
mean when Architect has furnished Sublandlord with a certificate that the
Improvements work to be done by Contractor in the Premises has been
substantially completed for Subtenant's occupancy of the
-2-
Premises except for Punch List Work and Sublandlord has obtained such
governmental permits and approvals as may be required for Subtenant's occupancy
of the Premises.
Section 2. DRAWINGS AND SPECIFICATIONS
2.1 Approval of Base Building Plans. The Base Building Plans attached
-------------------------------
hereto are hereby approved by the parties for construction.
2.2 Subtenant Improvement Working Drawings. The Subtenant Improvement
--------------------------------------
Plans attached to this Work Letter as Exhibit C-1 are preliminary plans and
specifications for the construction of the Subtenant Improvements. These
Subtenant Improvement Plans are hereby approved by Sublandlord and Subtenant.
Sublandlord will cause to be prepared and delivered to Subtenant within ten (10)
days of the final execution of this Work Letter, or as soon as reasonably
possible thereafter, final plans and specifications and working drawings for the
construction of the Subtenant Improvements that will include structural, fire
protection, mechanical and electrical working drawings, and final architectural
drawings for the Subtenant Improvements (collectively, "Subtenant Improvement
Working Drawings"). The Subtenant Improvement Working Drawings will
substantially conform to the Subtenant Improvement Plans. No later than five
(5) business days following Subtenant's receipt thereof, Subtenant must either
approve the Subtenant Improvement Working Drawings or set forth in writing with
particularity any changes necessary to bring the Subtenant Improvement Working
Drawings into substantial conformity with the Subtenant Improvement Plans.
However, Subtenant will not object to any logical development or refinement of
the Subtenant Improvement Plans or any changes necessitated by applicable law.
Failure of Subtenant to deliver to Sublandlord written notice of disapproval and
the required changes within said five business day period will constitute and be
deemed approval of the Subtenant Improvement Working Drawings. Sublandlord
shall resubmit any disapproved plan to Subtenant for approval within three (3)
business days. The above process will be repeated until the Subtenant
Improvement Working Drawings are approved by Subtenant. Upon approval, actual
or deemed, of the Subtenant Improvement Working Drawings by Sublandlord and
Subtenant, the final drawings and specifications will be referred to as the
Approved Working Drawings.
2.3 Determination of Subtenant Improvement Costs. Within ten (10) days
--------------------------------------------
from approval of the Approved Working Drawings, Sublandlord shall obtain from
the Contractor the estimated amount of the Subtenant Improvement Costs which
shall include all Contractor's fees and overhead ("Subtenant Improvement Cost
Estimate") and shall submit the amount to Subtenant for Subtenant's approval.
If Subtenant fails to notify Sublandlord of its disapproval within three (3)
business days after submission by Sublandlord to Subtenant of the amount of the
Subtenant Improvement Cost Estimate, Subtenant shall be deemed to have given
Subtenant's approval thereto. If Subtenant disapproves the Subtenant
Improvement Cost Estimate, Subtenant shall work diligently with the Architect
and Contractor, and within ten (10) business days after submission by
Sublandlord to Subtenant of the Subtenant Improvement Cost Estimate, shall cause
the Approved Working Drawings to be revised as necessary to cause the Subtenant
Improvement Cost Estimate to be approved by Subtenant. The cost of any such
modifications to the Working Drawings and any modifications to the Base Building
Improvements resulting from such changes shall be included in
-3-
Subtenant Improvement Costs. Upon approval by Subtenant of the amount of the
Subtenant Improvement Cost Estimate, and approval by Sublandlord of any
revisions to the Approved Working Drawings made to cause the amount of the
Subtenant Improvement Cost Estimate to be approved by Subtenant, Sublandlord
shall be deemed to have been authorized to proceed through Contractor with the
work of constructing and installing the Subtenant Improvements in accordance
with the Working Drawings and to disburse the Allowance and Subtenant Additional
Allowance in accordance with Section 3 below for all Subtenant Improvement
Costs. Sublandlord intends to execute a guaranteed maximum price construction
contract in the amount of the Subtenant Improvement Cost Estimate with
Contractor relating to construction of the Improvements.
2.4 Revisions to Approved Working Drawings. If at any time after the
--------------------------------------
Subtenant Improvement Cost Estimate is determined and approved by Subtenant,
Subtenant desires to make revisions to the Working Drawings, Subtenant shall
submit such changes to Architect who shall, at Subtenant's cost, promptly
prepare proposed working drawings and specifications containing all such desired
revisions, as a Subtenant requested Change Order. Sublandlord shall promptly
review such drawings and specifications and shall notify Subtenant of any
comments thereon or proposed revisions thereto within ten (10) days after
receiving such drawings and specifications. Subtenant shall resubmit to
Architect any such requested changes which are not approved by Sublandlord
within five (5) days after Sublandlord's disapproval, with accommodation of the
revisions requested by Sublandlord. Upon Sublandlord approval of the drawings
and specifications, such drawings and specifications shall constitute the
Approved Working Drawings. Upon approval by Sublandlord of any such revisions,
Sublandlord shall obtain promptly from Contractor the amount of any adjustment
in the Subtenant Improvement Cost Estimate resulting from such revisions, as
well as any Commencement Date Rent delay costs (or savings) resulting from such
Change Order, and submit the amount thereof to Subtenant for Subtenant's
approval. The procedure for approving any such adjustment and its related cost
shall be the same as approving the Subtenant Improvement Cost Estimate. Once
any adjustment and its related cost have been approved by Subtenant, Subtenant
shall be deemed to have given full authorization to Sublandlord, through its
contract with Contractor, to proceed with the work of constructing and
installing the Subtenant Improvements in accordance with the Approved Working
Drawings, as revised.
Section 3. PAYMENT OF COSTS
3.1 Sublandlord's Costs. Sublandlord shall pay all the Subtenant
-------------------
Improvement Costs up to, but not exceeding: the Sublandlord's Allowance; the
Sublandlord's Additional Allowance (subject to reimbursement as set forth above
and Section 3.2); provided Sublandlord's Costs shall include any Change Order
requested and approved by Sublandlord. Architect and Contractor shall submit
duplicate invoices to Sublandlord and Subtenant. Sublandlord shall disburse the
Allowance and any Subtenant's Costs amounts to pay the Subtenant Improvement
Costs, as and when the same become due and payable based upon such invoices and
fee statements. Sublandlord shall be entitled to rely on the accuracy of all
invoices and fee statements for labor performed or materials furnished in
connection with the Subtenant Improvements and to rely on any certification as
to the Subtenant Improvement Costs submitted by Contractor or Architect. The
obligation of Sublandlord to make any one or more payments pursuant to this Work
Letter or to proceed with the construction of the
-4-
Improvements shall be suspended without further act of the parties during any
such time as there exists any event of Default or Breach under the Sublease or
any event or condition which, with the passage of time or the giving of notice
or both would constitute such a Default. Nothing in this Work Letter shall
affect the obligations of Subtenant under the Sublease with respect to any
alterations, additions and improvements within the Premises, including, without
limitation, any obligation to obtain the prior written consent of Sublandlord
thereto.
3.2 Subtenant's Costs. Subtenant shall pay Subtenant's Costs within ten
-----------------
(10) days after Subtenant's receipt of Sublandlord's invoice upon Substantial
Completion of the Subtenant Improvements and Sublandlord's delivery of
Possession of the Premises to Subtenant. Sublandlord's final invoice shall
include a final and detailed accounting of all Subtenant Costs paid by
Sublandlord. For a period of thirty days following delivery of such invoice,
Subtenant may review the books, records and supporting documents of Sublandlord
with respect to the Subtenant Improvement Costs to the extent necessary to
satisfy Subtenant as to the accuracy of such accounting, during normal business
hours after giving Sublandlord at least forty-eight (48) hours written notice.
3.3 Failure to Pay Subtenant's Costs. Failure by Subtenant to pay
--------------------------------
Subtenant's Costs in accordance with this Work Letter within ten (10) days of
Sublandlord's invoice will constitute a failure by Subtenant to pay Rent when
due under the Lease and shall therefore constitute a Default by Subtenant under
the Lease, and Sublandlord shall have all of the remedies available to it under
this Lease for nonpayment of rent.
Section 4. CONSTRUCTION
4.1 Construction of Improvements. Promptly following finalization and
----------------------------
approval of the Subtenant Improvement Cost Estimate, Sublandlord will apply for
and use diligent efforts to obtain the necessary permits and approvals to allow
construction of the Improvements ("Permits"). Sublandlord shall execute a
construction contract with Contractor who will diligently construct and complete
the Improvements substantially in accordance with Approved Working Drawings.
Sublandlord specifically reserves the right to make at any time and from time to
time during the construction of the Improvements, any changes to the Approved
Working Drawings necessary to obtain any Permit or to comply with all applicable
regulations, laws, ordinances, codes and rules or to achieve the compatibility,
as reasonably determined by Sublandlord, of the Approved Working Drawings with
the shell and the core and the mechanical, plumbing and electrical systems of
the Building, the Base Building Improvements, and any third-party warranties.
4.2 Condition of Improvements. Contractor's construction contract shall
-------------------------
provide that all work performed by Contractor will be performed in a good and
proper manner, will be of good quality and free from defects in materials and
workmanship, and will be completed in substantial compliance with the Approved
Working Drawings, as the same may have been modified by approved changes or
other revisions, alterations or additions approved hereunder. Subtenant and its
representatives shall have the right to inspect the work in progress, provided
that Subtenant does not interfere with the progress of the work.
-5-
4.3 Punch List Work. Substantial Completion will have occurred
---------------
notwithstanding Architect's submission of a punch list to Contractor. Subtenant
may add items to the punch list at any time within thirty (30) days after the
Commencement Date. Sublandlord will cause Contractor to diligently complete any
Punch List Items no later than thirty (30) days after the Premises are
Substantially Complete, or thirty (30) days after Subtenant's notice as the case
may be, except for those items which would reasonably require in excess of
thirty (30) days to complete which items Contractor shall commence to complete
during said thirty day period and shall diligently prosecute to completion.
4.4 Warranties. Sublandlord shall obtain from Architect and Contractor
----------
and appropriate subcontractors commercially reasonable warranties of all work on
the Improvements that may be assigned in whole or in part to Subtenant that the
Improvements are in conformance with Applicable Requirements and free from
defects in workmanship or materials for a period of no less than one year from
the date of Substantial Completion thereof. Sublandlord shall assign all
Contractor and equipment vendor warranties to Subtenant as of the Substantial
Completion of such Improvements.
4.5 Subtenant's Work. All work in or about the Premises which is not
----------------
within the scope of the work necessary to construct and install the
Improvements, such as delivering and installing furniture, telephone equipment,
trade fixtures, wiring and office equipment, shall be furnished and installed by
Subtenant at Subtenant's cost and expense and shall be governed by Section 7.3
of the Master Lease (as incorporated into the Sublease). Subtenant shall adopt
a schedule, approved in advance by Sublandlord, for performing such additional
work consistent with the schedule of Contractor and shall see that such work is
conducted in such a manner as to maintain harmonious labor relations (including
the use of union labor) and as not to interfere unreasonably with or to delay
the work of constructing or installing the Subtenant Improvements. Sublandlord
shall give access and entry to the Premises to Subtenant and its contractors
performing such additional work and shall give reasonable opportunity and time
to enable Subtenant and such contractors to perform and complete such work.
Upon and following any entry into the Premises by Subtenant prior to the
Commencement Date of the Lease Term, Subtenant shall perform all of the
obligations pertaining to insurance, indemnity, compliance with laws and
hazardous materials and Utility Installation, Trade Fixtures and Alterations.
In addition to the indemnity obligations under the Lease, and except to the
extent caused by the active or gross negligence or willful misconduct of
Sublandlord or any of its agents, employers or contractors, Subtenant shall
indemnify, defend and protect Sublandlord and hold Sublandlord harmless from any
and all claims, proceedings, loss cost, damage death of persons or damage to
property occurring or resulting directly from the presence in the Premises or
the Building of Subtenant or its representatives in or about the Premises or
Building during the construction period, such indemnity to include without
limitation the obligation to provide all costs of defense against any such
claims, but shall be subject to the waiver of subrogation provisions of the
Master Lease as incorporated into the Sublease. All such additional work and
Subtenant's use of the Premises for such purposes shall be performed in
accordance with the Lease.
-6-
Section 5. DELIVERY OF POSSESSION OF THE PREMISES
5.1 Delivery of Possession. Sublandlord shall be deemed to have delivered
----------------------
Possession of the Premises to Subtenant on the date on which (i) the Substantial
Completion of the Improvements in the Premises has been certified by Architect
subject only to completion of Punch List Items, (ii) Tenant has direct access
from the street to the Premises; and (iii) Building services are ready to be
furnished to the Premises.
5.2 Delays in Delivery of Possession. Sublandlord shall exercise due
--------------------------------
diligence to cause Sublandlord's Contractor to cause Substantial Completion of
the Improvements in the Premises to occur on the Estimated Commencement Date.
If, for any reasons whatsoever, Possession has not occurred by the Estimated
Commencement Date, this Sublease shall not be void or voidable, nor shall
Sublandlord be liable for any loss or damages suffered by Subtenant; provided
however, that Rent shall be abated until the Commencement Date and, provided
further, that if Possession of the Premises has not been delivered to Subtenant
on or before May 1, 2000, Subtenant may, at any time thereafter but prior to the
delivery of Possession, terminate the Sublease in accordance with Section 3 of
the Sublease.
5.3 Approvals by Sublandlord or Subtenant. Any approval by Sublandlord or
-------------------------------------
Subtenant of or consent by Sublandlord or Subtenant to any plans, specifications
or other items to be submitted to and/or reviewed by Sublandlord or Subtenant
for the Subtenant Improvements pursuant to this Sublease shall be deemed to be
strictly limited to an acknowledgment of approval or consent by Sublandlord or
Subtenant thereto and such approval or consent shall not constitute the
assumption by Sublandlord or Subtenant of any responsibility for the accuracy,
sufficiency or feasibility of any plans, specifications or other such items and
shall not imply acknowledgment, representation or warranty by Sublandlord or
Subtenant that the design is safe, feasible, structurally sound or will comply
with any legal or any governmental requirements.
5.4. Subtenant's Delay. Intentionally Deleted.
-----------------
Section 6. MISCELLANEOUS.
6.1 Subtenant's Representative. Subtenant hereby designates Xxxx Xxxxx as
--------------------------
its sole representative with respect to the matters set forth in this Work
Letter, who shall have full authority and responsibility to act on behalf of the
Subtenant as required in this Work Letter, and Sublandlord shall be entitled to
rely upon the decisions and agreements made by such representative as binding
upon Subtenant.
6.2 Sublandlord's Representative. Sublandlord hereby designates Xxx
----------------------------
Xxxxxxx as its sole representatives with respect to the matters set forth in
this Work Letter, who, until further notice to Subtenant, shall have full
authority and responsibility to act on behalf of the Sublandlord as required in
this Work Letter.
6.3 Subtenant's Sublease Default. Notwithstanding any provision to the
----------------------------
contrary contained in this Sublease, if a Default or Breach as described in the
Sublease or a Default by
-7-
Subtenant under this Work Letter has occurred at any time on or before the
Commencement Date, then until such time as such Default or Breach is cured
pursuant to the terms of this Sublease (during which time Subtenant shall be
responsible for any delay in the Commencement Date caused by such inaction by
Sublandlord): (i) in addition to all other rights and remedies granted to
Sublandlord pursuant to the Sublease, Sublandlord shall have the right to
suspend construction of the Improvements and withhold payment of all or any
portion of the Sublandlord's Allowance, and (ii) all other obligations of
Sublandlord under the terms of this Work Letter shall be suspended.
6.4 Merger. The provisions of this Work Letter are deemed incorporated
------
into the Sublease and together shall be interpreted as one document; provided,
however, that if there is any conflict between the terms and provisions of this
Work Letter and the remainder of the Sublease, the terms and provisions of this
Work Letter shall control. Except as expressly set forth in this Work Letter,
Sublandlord has no other agreement with Subtenant and has no other obligation to
do any work or pay any amounts with respect to the Premises. Any other work in
the Premises which may be permitted by Sublandlord pursuant to the terms and
conditions of the Sublease shall be done at Subtenant's sole cost and expense
and in accordance with the terms and conditions of the Sublease.
6.5 Applicability of Work Letter. This Work Letter shall not be deemed
----------------------------
applicable to any additional space added to the original Premises at any time or
from time to time, whether by any options under the Sublease or otherwise, or to
any portion of the original Premises or any additions thereto in the event of
damage or destruction of the Premises, condemnation of the Premises, or renewal
or extension of the initial term of the Sublease, whether by any options under
the Sublease or otherwise, unless expressly so provided in the Sublease or any
amendment or supplement thereto.
6.6 Completion of Building. The Premises may be deemed Substantially
----------------------
Complete even though improvements in certain portions of the Building have not
been fully completed (so long as such does not interfere with Tenant's efficient
conduct of its business), and even though Tenant's personal property may have
not been installed.
IN WITNESS WHEREOF, the parties have executed this Work Letter as of the
date of the Sublease.
"Sublandlord": Xxxxxxx & Co., Inc., "Subtenant": Andromedia, Inc.,
a California corporation a California corporation
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxxxxxx
-------------------- ---------------------
Xxxxx X. Xxxxxxx Xxxxxxx Xxxxxxxxx, Chief Financial
Date: August 16, 1999 Officer
Date: August 16, 1999
-8-
EXHIBIT C-1
The following drawings prepared by IN:SITE Design Build Associates are
hereby incorporated herein by reference as the Base Building Plans:
A-0.0 dated 5/25/99. Prepared by IN:SITE Design Build Associates.
A-0.1, A-0.2, 0A-1.0, 1A-1.0, 2A-1.0, 3A-1.0, 4A-1.0, 5A-1.0, 6A-1.0, 7A-1.0,
8A-1.0, X-0.0, X-0.0, X-0.0, X-0.0, X-0.0, X-0.0, A-7.0 dated 4/2/99. Prepared
by IN:SITE Design Build Associates.
M-1.0, M-1.1, M-2, M-3 dated 5/6/99. Prepared by Laws & Associates, Inc.
S-14 dated 5/6/99. Prepared by Vahdani & Associates Inc. E-0, E-1, E-2, E-3, X-
0, X-0, X-0 dated 4/29/99. Prepared by Xxxxxxx Xxxx & Associates.
EXHIBIT C-2
The following drawings prepared by IN:SITE Design Build Associates are
hereby incorporated herein by reference as the Tenant Improvement Plans:
3A-0.0, 3A-1.0, 3A-2.0, 3A-3.0, 3A-4.0,4A-0.0, 4A-1.0, 4A-2.0, 4A-3.0, 4A-4.0,
5A-0.0, 5A-1.0, 5A-2.0, 5A-3.0, SA-4.0, 6A-0.0, 6A-1.0, 6A-2.0, 6A-3.0, 6A-4.0,
7A-0.0, 7A-1.0, 7A-2.0, 7A-3.0, 7A-4.0 All dated July 20, 1999 and prepared by
IN:SITE Design Build Associates.
Commencement Date Memorandum -- Exhibit D
[Date]
Xxxxxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Re: Sublease Dated August 12, 1999 ("Sublease") Between Xxxxxxx & Co.,
Inc. ("Sublandlord") and Andromedia, Inc. ("Subtenant")
Dear Xx. Xxxxxxx:
With respect to the sublease ("Sublease") between Andromedia, Inc.,
("Subtenant") and Xxxxxxx & Co., Inc. ("Sublandlord") by which Sublandlord
leased to Subtenant and Subtenant leased from Sublandlord approximately 27,500
rentable square feet of the building located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX ("Premises") in accordance with a Sublease dated August 12, 1999,
Subtenant acknowledges and certifies to Sublandlord as follows:
(1) The Sublease commenced on _____________ [date of commencement]
("Commencement Date");
(2) Subtenant has accepted and is currently in possession of the Premises.
(3) The Rentable Area is ___________________.
(4) [Based on the (increase/decrease) of the Rentable Area, the Minimum
Rent, Security Deposit, Subtenant's Share, Subtenant Improvement Allowance, etc.
are as follows:]
In Witness Whereof, this Commencement Date Memorandum is executed on
____________ [date].
"Subtenant" Andromedia, Inc.,
a California corporation
--------------------------------------------
Xxxxxxx Xxxxxxxxx, Chief Financial Officer
NEITHER THIS SECURITY NOR THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND NEITHER MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE FOR SUCH OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE
OPINION OF LEGAL COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.
WARRANT
To Purchase Shares of Common Stock of
ANDROMEDIA, INC.
(July __, 1999)
THIS CERTIFIES that, for value received, _____________________ (the
"Registered Holder"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from Andromedia, Inc., a
California corporation (the "Company"), shares of the Company's common stock as
follows: This Warrant will be exercisable for a total of 30,000 shares of
Common Stock at a price per share equal to $15.00 (the "Exercise Price"),
subject to the provisions and upon the terms and conditions hereinafter set
forth. This Warrant expires, if not exercised earlier, at 5:00 P.M. (PST) on
July ___, 2001 (the "Expiration Date").
1. Title of Warrant. Prior to the Expiration Date and subject to
----------------
compliance with applicable laws, this Warrant and all right hereunder are
transferable, in whole or in part, at the office of the Company or its transfer
agent by the bolder hereof in person or by duly authorized attorney, upon
surrender of this Warrant and the execution and delivery of such other documents
by the transferor and transferee as may be required by the terms and conditions
hereinafter set forth.
2. Method of Exercise; Payment.
---------------------------
(a) Cash Exercise. The purchase rights represented by this Warrant
-------------
may be exercised prior to the Expiration Date by the Registered Holder, in whole
or in part, by the surrender of this Warrant (with the notice of exercise form
(the "Notice of Exercise") attached hereto as Exhibit A duly executed) at the
---------
principal office of the Company, and by the payment to the Company of an amount
of cash (U.S. Dollars) equal to the Exercise Price multiplied by the number of
shares of Common Stock being purchased, which amount may be paid, at the
election of the Registered Holder, by wire transfer or certified check payable
to the order of the Company. The person or persons in whose name(s) any
certificate(s) representing Common Stock issuable upon exercise of this Warrant
shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the Common Stock
represented thereby (and such Common Stock shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant
------------------
to Section 2(a) hereof, the Registered Holder may elect to receive Common Stock
in an amount equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the Notice of Exercise in which alternative
No. 1 is initialed by the Registered Holder. In such event, the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:
Y(A-B)
X = -----
A
Where X = the number of shares of Common Stock to be issued to the
Registered Holder.
Y = the aggregate number of shares of Common Stock requested to be
exercised under this Warrant and thereafter canceled.
A = the fair market value of one share of the Company's Common Stock
(at the date of such exercise).
B = The Exercise Price (as adjusted to the date of such calculation).
For the purposes of the above calculation, the fair market value shall mean
with respect to each share of the Company's Common Stock:
(i) the average of the closing bid and asked prices of the
Company's Common Stock quoted in the over-the-counter market summary or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of the Wall Street
-----------
Journal for the ten (10) trading days immediately prior to but not including the
-------
date of determination of the fair market value; or
(ii) if the Company's common stock is not traded over-the-counter
or on an exchange, the fair market value shall be determined in good faith by
the Company's Board of Directors. Receipt and acknowledgment of this Warrant by
the Registered Holder shall be deemed to be an acknowledgment and acceptance of
any such fair market value determination by the Company's Board of Directors as
the final and binding determination of such value for purposes of this Warrant.
(c) Stock Certificates. In the event of any exercise of the rights
------------------
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to the Registered Holder within a reasonable time
and, unless this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not have been
exercised shall also be issued to the Registered Holder within such time. The
Company
-2-
covenants that all shares of stock which may be issued upon the exercise of
rights represented by this Warrant will, upon exercise of the rights represented
by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof (other than taxes with respect to any transfer occurring
contemporaneously with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant.
4. Charges, Taxes and Expenses. Issuance of certificates for shares of
---------------------------
Common Stock upon the exercise of this Warrant shall be made without charge to
the Registered Holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in
the name of the Registered Holder of this Warrant or in such name or names as
may be directed by the Registered Holder of this Warrant; provided, however,
that upon any transfer involved in the issuance or delivery of any certificates
for shares of Common Stock, the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax payable in
connection therewith.
5. No Rights as Shareholders. This Warrant does not entitle the
-------------------------
Registered Holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
--------------------------------
the surrender hereof by the Registered Holder at the above-mentioned office of
the Company or its transfer agent, for a new Warrant of like tenor and dated as
of such exchange. The Company shall maintain at the above-mentioned office or
agency a registry showing the name and address of the Registered Holder. This
Warrant may be surrendered for exchange, transfer or exercise, in accordance
with its terms, at such office or agency of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
-------------------------------------------------
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
---------------------------------
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
-3-
9. Adjustment of Exercise Price and Number of Exercise Shares. The
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number of shares of Common Stock for which this Warrant is exercisable and the
Exercise Price are subject to adjustment from time to time upon the occurrence
of certain events, as follows:
(a) Reclassification; Consolidation or Merger. In case of any
-----------------------------------------
reclassification, reorganization, consolidation or merger of the Company with or
into another entity or the sale of all or substantially all of the Company's
assets (whereby the shareholders of the Company immediately prior to such
transaction or series of related transactions own less than 50% of the voting
power of the successor or purchasing entity immediately following such
transaction or series of related transactions), the Company, or such successor
or purchasing corporation as the case may be, shall execute a new Warrant,
providing that the holder of this Warrant shall have the right to exercise such
new Warrant, and procure upon such exercise and payment of the same aggregate
Exercise Price, in lieu of the Shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification,
reorganization, consolidation, merger or asset sale by a holder of an equivalent
number of shares of Common Stock. Such new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Section 9(a) shall
similarly apply to successive reclassifications, reorganizations,
consolidations, mergers or asset sales.
(b) Subdivision or Combination of Shares. If the Company at any time
------------------------------------
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Warrant is
---------------
outstanding and unexpired shall pay a dividend with respect to Common Stock
payable in, or make any other distribution with respect to, Common Stock (except
any distribution specifically provided for in the foregoing Sections 9(a) or
9(b)), then the Exercise Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (1) the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of which shall
be the total number of shares of Common Stock outstanding immediately after such
dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
------------------------------
Exercise Price pursuant to Sections 9(a)-(c) hereof, the number of shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of shares of Common
Stock purchasable hereunder immediately prior to such adjustment in the Exercise
Price by a fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price immediately thereafter.
(e) Certificate as to Adjustment. In each case of any adjustment in
----------------------------
either the Exercise Price or in the number of shares of Common Stock, or other
stock, securities or property
-4-
receivable on the exercise of this Warrant, the Chief Financial Officer of the
Company shall compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a statement of
the adjusted Exercise Price and the adjusted number of shares of Common Stock
subject to this Warrant. The Company will cause copies of such certificate to be
mailed (by first class mail, postage prepaid) to the Registered Holder.
10. Representations and Warranties; Restrictions on Transfer; Market
----------------------------------------------------------------
Stand-Off.
---------
a) Representations and Warranties of Registered Holder. The
---------------------------------------------------
Registered Holder understands that neither this Warrant nor the shares of Common
Stock issuable hereunder have been registered under the Securities Act of 1933
(the "Securities Act") or any state securities laws. As a condition to the
issuance of this Warrant and to its exercise, the Registered Holder hereby
represents and warrants to the Company that:
(i) The Warrant and, if applicable, the shares of Common Stock
(collectively, the "Securities") have been acquired by the Registered Holder for
investment and not with a view to the sale or other distribution thereof or
within the meaning of the Securities Act and the Registered Holder has no
present intention of selling or otherwise disposing all or any portion of the
Securities.
(ii) The Registered Holder has acquired the Securities for the
Registered Holder's own account only and no one else has any beneficial
ownership in the Securities.
(iii) The Registered Holder is capable of evaluating the merits
and risks of any investment in the Securities, is financially capable of bearing
a total loss of this investment and has either: (i) a preexisting personal or
business relationship with the Company or its principals or (ii) by reason of
the Registered Holder's business or financial experience, has the capacity to
protect his or its own interests in connection with this investment.
(iv) The Registered Holder has had access to all information
regarding the Company, its present and prospective business, assets, liabilities
and financial condition that the Registered Holder considers important to making
the decision to acquire the Securities and has had ample opportunity to ask
questions of and receive answers from the Company's representatives concerning
an investment in the Securities and to obtain any and all documents requested in
order to supplement or verify any of the information supplied.
(v) The Registered Holder understands that the Securities shall
be deemed restricted securities under the Securities Act and may not be resold
unless they are registered under the Securities Act and any applicable state
securities law, or in the opinion of counsel in form and substance satisfactory
to the Company, an exemption from such registration is available.
(vi) The Registered Holder is aware of Rule 144, as amended,
promulgated under the Securities Act which currently provides, in substance,
that: (i) after one year from the date restricted securities have been
purchased and fully paid for, a holder may transfer restricted
-5-
securities provided certain conditions are met (e.g., certain public information
is available about the Company), and specific limitations on the amount of
shares which can be sold within certain periods and the manner in which such
shares must be sold are complied with; and (ii) after two years from the date
the securities have been purchased and fully paid for, holders who are not
"affiliates" of the Company may sell restricted securities without satisfying
such conditions.
(vii) The Registered Holder further understands that if the
requirements of Rule 144 are not met, registration under the Securities Act,
compliance with Regulation A, or some other registration exemption will be
required for any disposition of the Securities; and that, although Rule 144 is
not exclusive, the Securities and Exchange Commission ("SEC") has expressed its
opinion that persons proposing to sell restricted securities other than in a
registered offering or other than pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales and such persons and the brokers who participate in the
transactions do so at their own risk.
(b) Restrictions on Transfer. The Registered Holder, by acceptance
------------------------
hereof, agrees that, absent an effective registration statement filed with the
SEC under the Securities Act, covering the disposition or sale of this Warrant
or the Common Stock issued or issuable upon exercise hereof, such Registered
Holder will not sell or transfer any or all of such Common Stock without first
providing the Company with an opinion of counsel satisfactory to the Company to
the effect that such sale or transfer will be exempt from the registration and
prospectus delivery requirements of the Securities Act, and such Registered
Holder consents to the Company making a notation in its records, or giving
instructions to any transfer agent of this Warrant, or such Common Stock, in
order to implement such restriction on transfer. The shares issued upon
exercise of this Warrant shall bear legends referring to the restrictions on
transfer set forth in this Section 10. As a condition to the transfer of this
Warrant or transfer of the shares issuable on exercise hereof, any permitted
transferee must execute and deliver to the Company representations and
warranties similar to these set forth in this Section 10 and agree in writing to
accept and be bound by all the terms and conditions of this Warrant including
but not limited to Section 10(c) below.
(c) Market Stand-Off. The Registered Holder agrees that, if, in connection
----------------
with Company's first registered public offering of its securities under the
Securities Act (other than in a Rule 145 transaction or a registration relating
solely to employee benefit plans of the Company), the Company or the
underwriters managing the offering so request, the Registered Holder shall not
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any shares of Common Stock of the Company issued or
issuable upon exercise of this Warrant without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time not to
exceed 180 days from the effective date of such registration. The Registered
Holder further agrees to execute any lock-up agreement in furtherance of the
foregoing as the underwriters managing the offering may so request.
11. Miscellaneous.
-------------
(a) Issue Date. The provisions of this Warrant shall be construed and
----------
shall be given effect in all respects as if it had been issued and delivered by
the Company on the date hereof.
-6-
(b) Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is exercisable, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant, including
taking all actions necessary to increase the authorized number of shares of
Common Stock by a sufficient number of shares in the event this Warrant is
exercisable for shares of Common Stock and the Company does not have a
sufficient number of authorized shares of Common Stock. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of the Company's Common
Stock upon the exercise of the purchase rights under this Warrant.
(c) No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder hereof against impairment.
(d) Notices of Record Date. In case:
----------------------
(i) the Company shall take a record of the holders of its
Common Stock for the purposes of entitling them to receive any dividend (other
than a cash dividend) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares or stock of any class or any other
securities or property, or to receive any other right; or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to
the holder of this Warrant a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, and stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least thirty (30) days prior to the
date therein specified.
12. Attorneys' Fees. In the event any party is required to engage the
---------------
services of attorneys for the purpose of enforcing this Warrant or any provision
thereof, the prevailing party shall be entitled to recover its reasonable
attorneys' fees and any other related cost or expenses.
-7-
13. Headings. The headings in this Warrant are for purposes of
--------
convenience only, and shall not be deemed to constitute a part hereof.
14. Governing Law. This Warrant shall constitute a contract under the
-------------
laws of the State of California and shall be construed and enforced in
accordance with, and governed by, the internal laws of the State of California,
excluding that body of law applicable to conflicts of laws.
15. Terms Binding. This Warrant shall be binding upon any successors or
-------------
assigns of the Company. By acceptance of this Warrant, the Registered Holder
(and each subsequent assignee, transferee or Registered Holder) accepts and
agrees to be bound by all the terms and conditions of this Warrant.
[Execution Page Follows]
-8-
IN WITNESS WHEREOF, Andromedia, Inc. has caused this Warrant to be executed
by the duly authorized officer below.
Dated: July __, 1999
ANDROMEDIA, INC.,
a California corporation
By:_____________________________
Name:___________________________
Title:__________________________
Re: Notice and Consent of Assignment
--------------------------------
Ladies and Gentlemen:
Reference is hereby made to that certain Sublease Agreement, dated August
17, 1999 by and between Andromedia, Inc. and Xxxxxxx & Company (the "Sublease").
As you may know, Andromedia, Inc., a California corporation, has decided to
reincorporate under the laws of the State of Delaware (the "Reincorporation").
Although the Reincorporation does not constitute a change in control of the
business of, or the beneficial ownership interest in, Andromedia, as a matter of
law, all rights and obligations of Andromedia, Inc., a California corporation
("Andromedia California"), will be assigned to Andromedia, Inc., a Delaware
corporation ("Andromedia Delaware"). Andromedia Delaware will continue to
operate as Andromedia did before the Reincorporation and will honor all of its
contracts and obligations entered into before the Reincorporation. Andromedia
hereby provides you with notice of the Reincorporation.
The undersigned, as a duly authorized officer of Andromedia Delaware and
Andromedia California, hereby confirms for purposes of Section 10(f) of the
Sublease, that Andromedia Delaware expressly assumes all obligations of
Andromedia California under the Sublease. In addition, please be advised that
the Reincorporation constitutes a Permitted Transfer as defined in Section 10(a)
of the Sublease.
The Reincorporation is expected to become effective immediately prior to
completion of the Company's initial public offering. To acknowledge receipt of
this notice and your consent to the assignment of your contract, by operation of
law, resulting from the Reincorporation, please sign in the space provided below
and return this notice in the pre-paid envelope provided. You may retain the
duplicate of this notice for your records.
If you have any questions, please contact the undersigned representative of
Andromedia at 000-000-0000.
Very truly yours,
Andromedia, Inc.
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Vice President and Chief Financial Officer
ACCEPTED AND ACKNOWLEDGED:
By: /s/Xxxxx X. Path
-------------------------
Authorized Representative
Name: Xxxxx X. Path
-----------------------
Title:
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